Case Name: PEOPLE ex rel. NEW YORK CENT. & H. R. R. CO. v. PUBLIC SERVICE COMMISSION FOR SECOND DIST. et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-01-14
Citations: 145 N.Y.S. 513
Docket Number: 
Parties: PEOPLE ex rel. NEW YORK CENT. & H. R. R. CO. v. PUBLIC SERVICE COMMISSION FOR SECOND DIST. et al.
Judges: 
Reporter: West's New York Supplement
Volume: 145
Pages: 513–524

Head Matter:
(159 App. Div. 546)
PEOPLE ex rel. NEW YORK CENT. & H. R. R. CO. v. PUBLIC SERVICE COMMISSION FOR SECOND DIST. et al.
(Supreme Court, Appellate Division, Third Department.
January 14, 1914.)
1. Carriers (§ 10*)—Pares—Regulation—Public Service Commission—Jurisdiction. Railroad Law (Consol. Laws, c. 49) § 57, fixing maximum rates of fare, is subject to Public Service Commissions Law (Consol. Laws, c. 48) § 33, subd. 4, as amended by Laws 1911, c. 546, providing that nothing in the section .nor in any other provision of law shall be deemed to limit the power of, the Commission to prescribe reasonable and just rates as the maximum to be charged for commutation, school or family commutation, round-trip excursion tickets, or any other form of reduced rate passenger tickets, and hence the Commission has power to make an order reducing rates to be charged by a railroad company for commutation tickets in its suburban service.
[Ed. Note.—Eor other cases, see Carriers, Cent. Dig. §§ 12, 14-20; Dec. Dig. § 10.*]
2. Carriers (§ 10*)—Passenger Rates—Regulation—Proceedings Before Railroad Commission—Burden of Proof. In a proceeding before the Public Service Commission to have certain increased passenger rates annulled as unreasonable, the fact that the carrier had for a long series of years operated under an established lower rate did not raise a prima facie case that the increased rates were unreasonable so as to place on it the burden of proof that they were reasonable and that it was justified in raising the rate.
[Ed. Note.—For other cases, see Carriers, Cent. Dig. §§ 12, 14-20; Dec. Dig. § 10.*]
3. Carriers (§ 10*)—Rates—Increase—Reasonableness. Where, in proceedings to declare increased passenger rates invalid, the Public Service Commission neither found nor declared that the increased rates were unreasonable nor unjust, nor that they were unfair either to the public or to the relator, an order setting aside such rates and requiring the restoration of the lower rates previously existing, based entirely on the ground that the carrier had failed to overcome the presumption that the increase was unreasonable because it had operated for several years under the pre-existing lower rates, was erroneous.
[Ed. Note.—For other cases, see Carriers, Cent. Dig. §§ 12, 14-20; Dec. Dig. § 10.*]
4. Carriers (§ 10*)—Rates—Determination—Merits. In proceedings before the Public Service Commission to annul increased passenger rates, adopted and enforced by a carrier in its commutation suburban service, the carrier was entitled to have th'e Commission pass on the reasonableness of the increased rates on the merits in accordance with the facts as they then existed, and it was improper for the Commission to determine that the increased rates were unreasonable because the carrier had failed to show that the former rates, under which it had operated for a considerable period of time, were unremunerative.
[Ed. Note.—For other cases, see Carriers, Cent. Dig. §§ 12, 14-20; Dec. Dig. § 10.*]
Howard, J., dissenting.
Certiorari by the People, on relation of the New York Central & Hudson River Railroad Company, against the Public Service Commission for the Second District of the State of New York and others to review proceedings of the Commission fixing rates and charges for commutation and other passenger tickets to be charged by the relator for three years from March 1, 1913, between the Grand Central Station in the City of New York and stations intermediate to and including Peekskill, N. Y., on its Hudson division, and between the Grand Central Station in the City of New York and stations intermediate to and including White Plains, N. Y., on the Harlem division. Order annulled and remanded.
Argued before SMITH, P. J., and KELLOGG, LYON, HOWARD, and WOODWARD, JJ.
Charles C. Paulding, of New York City (Robert E. Whalen, of Albany, of counsel), for relator.
Ledyard P. Hale, of Albany, for defendant Public Service Commission.
Joseph S. Wood, of Mt. Vernon, for intervener Fiske, as Mayor of Mt. Vernon.
Max Cohen, of Yonkers, for intervener Lennon, as Mayor of Yonkers.

Opinion:
LYON, J.
This is a proceeding by certiorari to review the action of the New York State Public Service Commission, Second District, in establishing passenger rates between certain stations on the Hudson river and Harlem divisions of relator's railroad and its terminal station, known as the Grand Central terminal in New York City.
Pursuant to the provisions of chapter 425 of the Laws of 1903, the relator, since soon after the passage of that act, has been engaged in the work of building said terminal station, depressing its existing tracks, and constructing through tracks for a considerable distance northerly from its terminal station, and in changing its motive power from steam to electricity between its terminal station and Croton on its Hudson river division, a distance of 33.86 miles, and White Plains on its Harlem division, a distance of 22.39 miles, involving in all an expense to the relator, as stated by it, of upwards of $23,-000,000.
On July 1, 1910, the relator increased its passenger rates on both the Hud-, son river and Harlem divisions, and within a few days thereafter complaints were made to the Public Service Commission on behalf of four stations, Mt. Vernon and White Plains on the Harlem division, Peekskill on the Hudson river division, and Yonkers on .both divisions, that such rates were unjust and unreasonable and asking that such rates be reduced. In response to these complaints, the relator filed separate answers, and hearings were from time to time had by the Public Service Commission; the four complaints be ing heard together and determined under one order and with one opinion. On the 31st day of January, 1913, the Commission made it's order reducing the rates of fare to those which existed July 1, 1907, as to the 18 stations on the Hudson river division from Ludlow to Peekskill, and as to 10 stations on the Harlem division from Williams Bridge to White Plains; such change to become effective March 1, 1913, and to continue in force for three years from that date.
The Commission having denied the application of the relator for a rehearing, it obtained a writ of certiorari, and the proceedings and order of the Public Service Commission have thus been brought before us for review. The relator bases its claim of right to an annulment of the order of the Public Service Commission upon three grounds: First. That the Commission was without jurisdiction to make an order reducing the rate of fare. Second. That the Conmission erred in holding that the burden of proof was on the railroad company to justify the reasonableness of its advance July 1, 1910, of the rates which had been in existence since June 28, 1907. Third. That the rates established by the relator on July 1, 1910, were reasonable, and hence that the rates established by the Public Service Commission by its order of February 13, 1913, were unreasonable and unjust to the relator, and that the Commission did not find as a fact that the rates complained of were unjust or unreasonable.
The question as to the jurisdiction of the Commission to make an order reducing rates is discussed by Justice Kellogg in his opinion in the case of People ex rel. New York, New Haven & Hartford Railroad Co., 145 N. Y. Supp. 503, decided by us at this term of court, in which authorities are cited and the conclusion reached that the Commission had the power to fix the rates in question. With such conclusion we fully concur, and hence there is no necessity for a further discussion of that subject, but it may be observed that section 57 of the Railroad Law (Consol. Laws, c. 49), fixing maximum rates of fare, is made subject to the provisions of the Public Service Commissions Law, which provides:
"Nothing in this section or in any other provision of law shall be deemed to limit the power of the Commission to require the sale of, and upon investigation prescribe reasonable and just fares as the maximum to be charged for, commutation, school or family commutation, round-trip excursion tickets, or any other form of reduced rate passenger tickets." Subdivision 4, § 33, of the Public Service Commissions Law (Consol., Laws, c. 48), as amended by chapter 546, Laws of 1911.
Thus the Legislature, in fixing maximum fares to be charged for transportation, reserved the right to change the same or in specified' instances or classes through the agency created by it for that purpose, which right the Legislature had not reserved in the act under consideration in the case of L. S. & M. S. Ry. Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565, 43 L. Ed. 858.
As to the second ground of error alleged by the relator, the record discloses the following conversation as occurring upon the opening of the hearing before the Commission:
"The Chairman: Now I suppose the complainants take the same position as in the New Haven cases. R.elator's Attorney: I would like to ask what that position is. The Chairman: Why, in the first instance, you have increased a long established rate, which was established by your voluntary act, and the burden of proof is upon you, so to speak, to show the reason for doing it, to justify that action. The Chairman: This Commission has held that where a railroad company by its own voluntary act has established a raté and has continued it in use for a certain length of time so it was its established rate, not as a mere experiment trying how it would work, but it has acted upon them, and the public has acted upon them for a considerable length of time, that shows that presumptively it is a reasonable rate as against the public and as against the road, and when that road undertakes to increase the rate, the reasons being within the knowledge of the corporation which justify it, it devolves upon the corporation, in a hearing of this kind, to present those reasons: First, to show us that the increase they have made is a just and reasonable rate."
To this ruling the relator duly excepted.
That the burden of proof was upon the complainants and not upon the railroad company has been thus stated in the following cases:
"It must also be remembered that there is no presumption of wrong arising from a change of rate by a carrier. The presumption of honest intent and right conduct attends the action of carriers as well as it does the action of other corporations or individuals in their transactions in life. Undoubtedly when rates are changed the carrier making the change must, when properly called upon, be able to give a good reason therefor, but the mere fact that a rate has been raised carries with it no presumption that it was not rightfully done. Those presumptions of good faith and integrity, which have been recognized for ages as attending human action, have not been overthrown by any legislation in respect to common carriers." Interstate Commerce Commission v. Chicago G. W. Ry., 209 U. S. 108-119, 28 Sup. Ct. 493, 497 (52 L. Ed. 705).
"When the bills were filed, the carriers insisted that the order was the result of a mistake of law, in that the Commission held that the long maintenance of the 40-cent rate raised a presumption that it was reasonable, because the carriers had been earning a reasonable profit. But we need not consider whether, under such circumstances, the maintenance of the admittedly low rate raised any presumption of reasonableness, or, if so, whether it is not neutralized by the presumption of right conduct by the carrier as primary rate maker. 209 U. S. 108, 28 Sup. Ct. 493, 52 L. Ed. 705. For whatever influenced the Commission in restoring the rates to the Pembina line, as to which there is now no appeal, it is evident that as to points east of that line they did not act on any presumption that the old 40-cent rate was reasonable. On the contrary, they acted directly contrary to any such presumption, and, instead of maintaining the old rate, allowed a new and higher rate to St. Paul." Interstate Commerce Commission v. Union Pac. R. R., 222 U. S. 541-550, 32 Sup. Ct. 108, 112 (56 L. Ed. 308).
"It is to be noted with regard to these (rates) that, as the law then stood, the mere fact that they were increased by the company over what they had been previously creates no presumption that they were not fair and reasonable. It is said, however, in the report of the Commission, that the Mobile & Pensacola rates had remained substantially unchanged for over 20 years, and that there was no evidence that they had not been compensatory. At the time this statement was made, the increased rates were in force, which were established in 1907, and not the old ones in existence before, that. And it was- the unreasonableness of these new rates which the complainants in the proceedings had the burden of showing. There was no adverse presumption to be indulged, as we have seen, because of the increase. Nor is a voluntary rate established to meet competition to be taken as the measure of what is reasonable. " And yet that in effect is just what the Commission did in suggesting in defense of the reduction and restoration which it undertook to make that the previous rates were not shown negatively not to have been compensatory. It was not incumbent on the railroad at that stage to make this out, but on the complainant to show that the rates as they stood were unjust and unreasonable." Louisville & N. R. R. v. Interstate Commerce Commission (Com. C.) 195 Fed. 541, 557-558.
Congress recognized the fact that, where the statute was silent, the burden of proof before the Interstate Commerce Commission as to the charge of excessive rates was upon the complainants, by enacting in 1910 a statute providing that the burden of proof should be upon the railroad company. 36 United States Statutes at L. p. 556, c. 309 (U. S. Comp. St. Supp. 1911, p. 1332).
The complaints instituting this proceeding alleged that the increase of rates of July, 1910, was unreasonable and unjust, and asked that the same be reduced to such sums as might be reasonable and just. As a general principle of law, the burden of proof is upon the party who, through the instrumentality of a proceeding which he has instituted, seeks to establish certain facts.
The burden of sustaining the affirmative of an issue involved in an action is upon the party alleging the facts constituting the issue. Heinemann v. Heard, 62 N. Y. 448.
It is an invariable rule that the burden of proof lies upon the plaintiff to establish his cause of action, and we know of no circumstance which excuses him from this obligation and imposes the duty upon the defendants of proving that the alleged cause of action did not exist. Meagley v. Hoyt, 125 N. Y. 771-772, 26 N. E. 719.
Every fact alleged in the complaint which plaintiff is required to prove in the first instance to make out his case, 'and which is put in issue, he is bound to prove by a preponderance of evidence. Farmers' L. & T. Co. v. Siefke, 144 N. Y. 354, 39 N. E. 358.
A party relying upon the establishment of a cause of action, or remedy against another, based upon wrongdoing, must show affirmatively facts and circumstances necessarily tending to establish a probability thereof. Shotwell v. Dixon, 163 N. Y. 43-52, 57 N. E. 178.
Very many other authorities might be cited to the effect that the burden of proof is upon the party complaining. There are certain exceptions to the rules, as where one relies upon an exception in the statute to take his case out of the rule laid down in the body of the statute itself. In such a case it lies upon the person-insisting upon the exception to bring himself within it (Fleming v. People, 27 N. Y. 329; Hirshbach v. Ketchum, 5 App. Div. 324, 39 N. Y. Supp. 291; People v. Crotty, 22 App. Div. 77, 47 N. Y. Supp. 845); and where a guardian purchases land of his ward at a judicial sale, which purchase is by statute void, the burden is on the guardian to show that the purchase was for the benefit of the infant (O'Donoghue v. Boies, 159 N. Y. 87, 53 N. E. 537). An exception as to the burden of evidence 'at times exists where information is peculiarly within the knowledge of one party and not available to the other.
The ruling of the Commission that the burden of proof was upon the relator was made at the opening of the hearings in this proceeding in December, 1910, in the face of the conceded fact, known to the complainants and the members, of the Commission, that the relator had been compelled to increase the wages of a large proportion of its employ 6s; that the prices of certain materials and supplies necessarily used by it in the maintenance and operation of its railroad had materially advanced; and that practically every railroad entering New York City had increased its passenger rates under the claim that it could not operate its trains under the former rates excepting at a considerable loss. /
While eoncededly the railroad company had possession of books and papers showing the receipts and expenses and other facts attending the opération of its railroad, yet the Commissioners were, by statute, given the power to examine all papers of the relator, to compel, the production of sworn copies thereof, and to issue subpoenas to compel the attendance of persons and the production of books and papers.. Public Service Commissions Law, § 45, 46. The latter section also provided that every railroad corporation should file an annual report in the form, and containing the information asked for by the Commission; that the Commission might also require such corporation to file periodic reports in the form covering the period and the time prescribed by the Commission; and that the Commission might also require, of any such corporation or person, specific answers to questions upon which the Commission might need information. The complaints filed with the Commission by the interveners, particularly that relating to the village of White Plains indicated that information as to many facts considered by the complainants, germane to the issues, were not confined to officers of the relator. Prom the record it appears that the relator furnished all the information requested which xas within its power to furnish.
There, is no provision of the New York Public Service Commissions Law which places the burden of proof upon the railroad company or takes proceedings before the Commission out from under the general rule. Yet in the case' at bar, instead of holding that the burden of proof was upon the complainants, who alleged that the rates of fare were unreasonable and unjust, the Commission held that the burden of proof was upon the railroad company to prove affirmatively that the rates were not unreasonable and unjust. In its opinion accompanying the order, the Commission says:
"A rate (1) fixed and established as the voluntary act of the corporation itself, (2) which has been charged and collected by the corporation during a period of time sufficiently long to show that it is not a mere experiment, and has been the rate which the corporation charged and collected as a regular and settled rate, (3) which has been accepted by the public in its dealing with the corporation as just and reasonable, (4) along which business affected by the rate has prospered and increased, must, as against the corporation, be treated, as presumptively just and reasonable. It is unreasonable to increase such a rate without a new state of facts which for some reason makes the old rate not justly and fairly remunerative to the corporation. Such facts, if they exist, are peculiarly within the knowledge of the corporation. A change having "been made by it from a presumptively • reasonable rate, the burden lies upon it in the first instance to-overcome by evidence the presumption of fact that the increased rate is unreasonable. All of the foregoing conditions obtain in the present cases, except that numbered 3, with reference to the New York Central. That company increased its commutation rates in the year 1907, and this increase has never been acquiesced in by the public as being just and reasonable."
It may also 'be observed that this conclusion assumed by the Commission numbered 4, to the effect that under the rates of 1907 the business affected by the rates had prospered, does not appear to be borne out by the evidence. In its opinion the Commission also says: "We think that the respondent corporations have not succeeded by the evidence and arguments presented by them in overcoming the presumption that the increases complained of were unjust and unreasonable."
Hence, had no evidence whatever been offered by any party to the controversy, the Commission must have considered it to be its duty to order a reduction in the rates, but the power to change rates was given to the Commission only when, after a hearing had the Commission should be of the opinion that the rates, fares, or charges demanded, exacted, charged, or collected by any railroad company are "unjust, unreasonable, and then to determine the just and reasonable rates, fares, and charges to be- thereafter observed and in force as the maximum to be charged." Public Service Commissions Law, § 49.
Under the Interstate Commerce Act, it has been held that a determination by the Commission that the rates were unjust and unreasonable is a statutory condition precedent to the exercises of the power to fix reasonable rates for the future (A., T. & S. F. Ry. Co. v. U. S. [Com. C.] 203 Fed. 56), and we think a similar condition precedent exists under the New York Public Service Commissions Lawi
The Commission made no findings whatever and probably was not required by law to make findings. Eesort must therefore be had to the opinion of the Commission in order to determine the basis of its decision. Nowhere, either in the opinion or in the order, has the Commission declared that it has found the rates of 1910 to be unreasonable or unjust, or to be unfair to either the public or the relator, but the Commission has based its action ordering the rates of 1907 restored, upon the ground that the railroad company has failed to overcome the presumption that the increase of rates made by it in 1910 was unreasonable and unjust.
We think the relator was entitled to have the determination of the Commission made upon the merits, and to be advised what in the opinion of the Commission were fair and reasonable rates, rather than to have the decision against it based upon the ground that, in the opinion of the Commission, the relator had failed to overcome the presumption of wrongdoing. It is in this view that we have considered the ruling of the Commission as to the burden of proof worthy of such extended consideration.
As to the third question involved, to wit, that the rates established by the relator July 1, 1910, were reasonable, and that the rates established by the order of the Public Service Commission were unreasonable and unjust, it is to be observed that the rates reduced by the Public Service Commission were those on the Hudson division relating to the 50-trip or family tickets, and the 60-trip or commutation tickets, and that the reduction upon the Harlem division related to the same two classes of tickets and also to the round-trip tickets. As to the 60-trip tickets, known as commutation tickets; a comparison of the rates allowed to be charged by the relator, as fixed by the Commission, with those in force in July, 1910, upon other railroads entering New York City, Yonkers on the Hudson river division, and Mt. Vernon on the Har lem division, being taken as furnishing distances most readily compared, shows the following results:
Hudson River Division.
While the increased commutation rates of 1910 upon the Hudson river and Harlem divisions of the New York Central were in general slightly in excess of the average rates upon the other railroads named in the foregoing tables, yet the 1907 schedule, to which the Commission reduced relator's rates, were, as shown by these tables, far below the then rates of every other railroad. No good reason appears in the record why the relator was not entitled to receive practically the same compensation for carrying passengers the same distances. This conclusion seems to have been in the mind of the chairman of the Commission when he said to the complainants: "There is the first point that the Interstate Commerce Commission has practically affirmed the commutation rates on the West Shore road, which are identical in principle with those you complain of on the Harlem division."
The complainants refusing to accept such rates, the hearing proceeded. While the determination of the Interstate Commerce Commission was not binding upon the New York Public Service Commission in the matter of fixing the commutation rates to be charged by the relator, yet the then recent decision of the Interstate Commission in the case of the West Shore Railroad, operated by the New York Central, and of the other railroads, filed with the Public Service Commission at its hearing had in this proceeding in September, 1911, after an investigation of rates, is worthy of serious consideration as furnishing reliable evidence as to what were just and reasonable rates upon railroads entering New York City. While the commutation rates of 1910 were allowed to remain upon the interstate railroads, which included all the railroads mentioned in the foregoing table, excepting that of the relator, the relator's commutation rate was very materially reduced. This fact would of itself tend to indicate that the relator had some claim of right in its contention that the 1907 rates were unreasonably low, and would tend to controvert the presumption of wrongdoing upon the part of relator in advancing its 1907 rates. As to the evidence introduced by complainants, relating to commutation rates into cities in more or less remote parts of the country, such evidence can hardly be of much service in determining the rates which are just and reasonable as to relator's said divisions, in the absence of proof as to the conditions and expenses under which such other railroads were operated. It is now 3% years since this proceeding was instituted before the Public Service Commission. It is a matter of common knowledge that very recently a further increase of wages has been made and legislation had, which has materially increased the expense to relator of operating its trains. Also during this period the electrification of the suburban zone has been practically completed, and for a considerable time the relator has operated its trains over its Hudson river and Harlem divisions within such zone by electricity. This change of motive power may have resulted in very materially reducing the cost to relator of operating both divisions and justify a reduction of rates, but. the results arising from electrification were more or less problematical at the time the hearings were had in this proceeding. The probable' receipts and expenses of such future operation should now be capable of reasonably definite ascertainment. Furthermore, the evidence introduced at the hearings of the Commission related largely to the cost of operation as it existed in 1910, and not to the cost of operation as it was at the time the order was made in 1913. Whether the rates established in 1910 were then reasonable is not now so material as what are just and reasonable rates during the period for which the Commission has the power to fix the same. This court has not the power to fix rates. As was said by the United States Supreme Court in the case of Simpson v. Shepard, decided in June, 1913, reported 230 U. S. 352, 33 Sup. Ct. 729, 57 L. Ed. 1511, commonly known as Minnesota Rate- Case: "The rate-making power is a legislative power and necessarily implies a range of legislative discretion. We do not sit as a board of revision to substitute our judgment for that of the Legislature, or of the Commission lawfully constituted by it, as to matters within the province of either."
It simply rests with the court to determine whether the record presented to it satisfactorily establishes the former rate to have been unreasonable and unjust, and the fixed rate to be reasonable and fair. The record in this proceeding does neither. It discloses no adjudication upon the merits as to what were the just and reasonable rates of fare. It must be held that upon all the evidence there was not such a preponderance of proof that the rates of 1910 were unreasonable and unjust, that the verdict of a jury, affirming such fact, rendered in an action in the Supreme Court, would not be set aside by the court as against the weight of evidence.
Upon another hearing the results of the operation of the railroad during the period since its practical completion should enable the Commission to intelligently determine the rates of fare as to the different classes of tickets, between the several stations and the city of New York, which will be just to both the passenger and the railroad company. Such portions of the present record as are material to the issues can be stipulated in evidence, leaving for the greater part to be supplied the experiences and results arising from the operation of the railroad during the past three years, and thus a speedy and comparatively inexpensive determination of the questions in dispute can be had. As the learned chairman of the Public Service Commission has stated in his opinion, the determination of the issues in this proceeding are important; and it is by reason of the importance of an order fixing the various rates of fare at 18 stations on the Hudson River Division, and 10 stations on the Harlem division of relator's railroad, that we have endeavored to give the voluminous record the careful consideration which its importance demanded.
Unquestionably, as the opinion also states, the rates of fare should be placed at the lowest point consistent with reason and fairness. This also means that the relator is entitled to be justly treated and to receive fair compensation for the service it renders. The disposition to fairness is the predomi nant trait of American character, and it may be unhesitatingly asserted that the great body of travelers desire the questions of rates disposed of fairly to both parties.
The order of the Commission must be annulled, but without costs, and without prejudice to a new application at any time.