Court Opinion

ID: 9418688
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:35:32.073918+00
Date Added: 2024-06-11T16:49:52.502534
License: Public Domain

Mr. Justice Brandeis,
dissenting.
The Railway claims that the Commission’s refusal to authorize a fare higher than five cents confiscates its property. The City and the Commission do not insist here that the five-cent fare is compensatory; and they concede that, since 1915, the latter has had jurisdiction to authorize a higher fare. They defend solely on the ground that the Railway bound itself by contracts not to charge more; that these contract provisions are still in force, except as modified by the Act of 1915 empowering the Commission to authorize changes in the rate; *159that an alleged error of the Commission in refusing authority to. charge more can be corrected only by proceedings'brought in the Supreme Court of the State to compel the Commission to do its duty; and that the lower court’s finding that the rate is non-compensatory is, therefore, immaterial.
The District Court recognized that such contracts, if existing, would be a complete defense to this suit, Columbus Ry. & Power Co. v. Columbus, 249 U. S. 399; Georgia Ry. & Power Co. v. Decatur, 262 U. S. 432; Opelika v. Opelika Sewer Co., 265 U. S. 215; St. Cloud Public Service Co. v. St. Cloud, 265 U. S. 352; Southern Utilities Co. v. Palatka, 268 U. S. 232; expressed a strong doubt whether the City ever had the power to contract concerning the rate of fare; and, declining to pass upon that question, granted the relief prayed for solely on the ground that any such contract right which existed had been abrogated.
The franchises under which the Railway is operating are confessedly contracts. The words used concerning the rate of fare are apt ones to express contractual obligations. The Railway .contends, .however, that the fare provisions were not intended to be contracts, and that, if they were -so intended, they were not binding, because neither the City nor the County had the power to contract as to the rate of fare. It insists further that if the fare previsions, were originally binding as contracts, they were abrogated in 1921 or 1928 by action of the Commission.
First, Most of the franchises were granted before the State had vested in the Commission power to regulate street railway rates or had expressly reserved to itself, otherwise, the power to change rates theretofore fixed by ordinance. This power of regulation was first expressly conferred upon the Commission in 1915, by amendments to §§ 13, 27 and 63 of the Public Utilities Act, Stats. 1915, *160p. 115, made pursuant to an amendment of § 23 of Article XII of .the California Constitution adopted November 3, 1914. These enactments did not purport to abrogate any existing contract. Nor did they purport to take from, the City or from the County any power theretofore possessed to make a contract concerning the rate of fare. Their effect was merely to make any such contract, whether theretofore or thereafter entered into, subject to change by the Commission. Unless and until so changed a contractual fare fixed by franchise remains in full force. Henderson Water Co. v. Corp. Comm., 269 U. S. 278, 281-2. Consequently, it is not here claimed that these enactments alone abrogated the alleged contracts as to rate of fare.
Second. The Railway contends, however, that the Commission abrogated the fare contracts by its action taken in 1921 pursuant to this legislation. The facts are these. In 1918, the Railway asked the Commission to make an investigation of its service and its financial condition and for an order enabling it to so operate its system that the income would be sufficient to pay the cost of the service. In that application the Railway expressly disclaimed any desire to increase its rate of fare, but about two years later, it made a supplemental application for leave to do so. On May 31, 1921, the Commission made a report in which it declared that “ an increase in the fare in some form ” should be granted; and that the Railway be authorized “ to file with the Commission and put into effect within thirty (30) days from the date of this order a- schedule. of rates increasing the present basic 5-cent fare to 6 cents,” ten tickets for 50 cents. 19 Cal. R. R. Comm. Op. 980, 1002. The Railway did not file a schedule of fares. Instead, it moved for a rehearing. That motion was promptly set down for hearing by the Commission, but was never heard. For the Railway asked first'for an adjournment; then that its motion be stricken *161from the calendar; and finally, that an order be entered setting aside the decision made and dismissing the entire proceeding, including the application for increase of fare. This request of the Railway was granted, the order of dismissal reciting that the authorization to increase the fare had “ been suspended by virtue of the pendency of a petition for rehearing,” as the statutes provided. Public Utility Act, § 66. Obviously this action taken in 1921 cannot be deemed an abrogation or modification of any existing fare provision of the franchises, unless it be held that mere entry by the Commission upon an enquiry as to the rate of fare, as commanded by the statute, has that effect. Reason and authority are to the contrary. .
Third. Nor did the action taken by the Commission in 1928, in the proceedings now under review, abrogate any existing fare provision. There also the Commission took jurisdiction, as it was by the statute required to do. It refused to authorize a higher fare, because it concluded that for the past five years the Railway had been earning an average annual return of 7.1 per cent; that it was not being efficiently operated; that the management had failed to introduce certain economies previously recommended which would have increased its net earnings; and that for these reasons the existing five-cent fare was just and reasonable. The Commission may have erred in its judgment, but it is-clear that it did not change the rate of fare. In Georgia Ry. & Power Co. v. Decatur, 262 U. S. 432, 439, it was held that the assumption of jurisdiction by the Commission to the extent of affirmatively ordering the continuance of existing transfer privileges did not effect an abrogation of an existing contract provision relating thereto, since such action did not conflict with the terms of the contract. Compare Los Angeles v. Los Angeles City Water Co., 177 U. S. 558, 578-84; Minneapolis, v. Street Ry. Co., 215 U. S. 417, 435. In Denney v. Pacific Telephone Co., 276 U. S. 97, the Commission had previ*162ously granted an increase in fare of which the Company had availed itself.
Assuming that the Railway was bound by contract to maintain a five-cent fare, it could be relieved from its obligation only by the Commission. Had the Commission authorized an increase m fare,.it would still be questionable whether the contract would have been thereby abrogated or only modified by making the Railway’s obligation less onerous. Surely, the Commission’s refusal to grant any help, because in its opinion none is needed, cannot have the anomalous effect of entirely relieving the Railway of its obligation.
Fourth, If the District Court erred in holding that the action taken in 1921 or 1928 had the effect of abrogating any existing contract, there must be a '.determination whether such contracts did exist, in fact\and law. It was assumed by the District Court and by counsel in this Court that if the City lacked the power to bind itself contractually by the fare provisions, the Railway could not be bound thereby. This conclusion is not commanded by logic or by the law of contracts. Lack of power in the municipality to bind itself is a factor to be considered in determining whether the parties intended to enter, into a contract. But, if they did, the Railway’s promise need not fail for lack of mutuality. The law does not require that a particular contractual obligation must be supported by a corresponding counter-obligation. It is conceded that the City possessed the power to enter into the franchise contract. The contention is merely .that it could not surrender its power to regulate rates. But there inothing in the fare provisions to indicate that the City attempted to do that. These provisions in terms bind only the Railway. The Railway unquestionably had power to agree to charge a fixed fare. The grant of the franchise is sufficient consideration, if so intended, for any number of contractual obligations which the Railway may *163have chosen to assume. In Southern Iowa Electric Co. v. Chariton, 255 U. S. 539, a case coming from Iowa, it was held, following Iowa decisions, that since the city lacked power to bind itself, there was no ¡contract. And there is a statement to that effect in San Antonio v. San Antonio Public Service Co., 255 U. S. 547, 556. But in Southern Utilities Co. v. Palatka, 268 U. S. 232, 233, the question was expressly left open. Obviously, that is a matter of state law on which the decisions of this Court are not controlling.
Fifth. If it be true that the Railway is not bound by the fare provisions, unless the City had power to bind itself in that respect, it is necessary to determine whether the City had that power and whether the parties did in fact contract as to the rate of fare. Whether the City had the power is, of course, a question of state law. In California, the constitution and the statutes leave the question in doubt. Counsel agree that there is no decision in .any court of the State directly in point. They reason from policy and analogy. In support of their several contentions they cite, in the aggregate, 30 decisions of the California courts, 15 statutes of the State, besides 3 provisions of its code and 7 provisions of its constitution. The decisions referred to occupy 308 pages of the official reports; the sections of the constitution, code and statutes, 173 pages. Moreover, the 102 franchises here involved were granted at many different times between 1886 and 1927. And during that long period, there have been amendments both of relevant statutes and of the constitution. The City or the County may have had the power to contract as to the rate of fare at one time and not at another. If it is held that the City or the County ever had the power to contract as to rate of fare, it will be necessary to examine the 102 franchises to see whether the power was exercised. It may then be that some of the franchises contain valid fare contracts, while others *164do not. In that event, the relief to be granted will involve passing also on matters of detail.
In my opinion, these questions of statutory construction, and all matters of detail, should, in the first instance, be decided by the trial court. To that end, the judgment of the District Court should, be vacated and the case remanded for further proceedings, without costs to either party in this Court. Pending the decision of the trial court an interlocutory injunction should issue. Compare City of Hammond v. Schappi Bus Line, 275 U. S. 164; City of Hammond v. Farina Bus Line & Transportation Co., 275 U. S. 173; Ohio Oil Co. v. Conway, 279 U. S. 813. It is a serious task for us to construe and apply the written law of California. Compare Gilchrist v. Interborough Rapid Transit Co., 279 U. S. 159, 207-209. To “one brought up within it, varying emphasis, tacit assumptions, unwritten practices, a thousand influences gained only from life, may give to the different parts wholly new values that logic and grammar never could have got from the books.” Diaz v. Gonzalez, 261 U. S. 102, 106. This Court is not peculiarly fitted for that work. We may properly postpone the irksome burden of examining the many.relevant state statutes and decisions until we shall have had the aid which would be afforded by a thorough consideration of them by the judges of the District Court, who are presumably more familiar with the law of California thah we are. The practice is one frequently followed by this Court.1
*165In the case at bar, there are persuasive reasons for adopting the course suggested. ' The subject matter of this litigation is local to California. The parties are all citizens of that State and creatures of its legislature. Since the Railway denies that there ever was a valid contract governing the rate and asserts that if any such existed they have been abrogated, the contract clause of the Federal Constitution is not involved. The alleged existence of contracts concerning the rate of fare presents *166the fundamental issue of the case. Whether such contracts exist, or ever existed, depends wholly upon the construction to be given to laws of the State. Upon these questions, the decision of the Supreme Court of California would presumably have been accepted by this Court, if the case had come here on appeal from it. Compare Georgia Ry. & Power Co. v. Decatur, 262 U. S. 432, 438; Appleby v. City of New York, 271 U. S. 364, 380.
The constitutional claim of confiscation gave jurisdiction to the District Court. We may be required, therefore, to pass, at some time, upon these questions of state law. And we may do so now. But the special province of this Court is the Federal law. The construction and application of the Constitution of the United States and of the legislation of Congress is its most important function. In order to give adequate consideration to the adjudication of great issues of government, it must, so far as possible, lessen the burden incident to the disposition of cases, which come here for review.2
Mr, Justice Holmes joins in this opinion.

 This course was pursued in the following, among other cases, in which a lower Federal court erroneously left undecided a question of local law or of its application, Gainesville v. Brown-Crummer Co., 277 U. S. 54, 61, Hammond v. Schappi Bus Line, 275 U. S. 164, 169-72, Hammond v. Farina Bus Line, 275 U. S. 173, 174-5, Wilson Cypress Co. v. Del Pozo, 236 U. S. 635, 656-7; in the following cases in which the lower court erroneously left undetermined a question of fact, Security Mortgage Co. v. Powers, 278 U. S. 149, 159, United *165States v. Magnolia Co., 276 U. S. 160, 164-5, United States v. Brims, 272 U. S. 549, 553, Gerdes v. Lustgarten, 266 U. S. 321, 327, Chastleton Corp. v. Sinclair, 264 U. S. 543, 548-9, Vitelli & Son v. United States, 250 U. S. 355, 359, Southern Pacific Co. v. Bogert, 250 U. S. 483, 494, 497, Union Pac. R. R. Co. v. Weld County, 247 U. S. 282, 287, Marconi Wireless Co. v. Simon, 246 U. S. 46, 57, Owensboro v. Owensboro Waterworks, 191 U. S. 358, 372, Chicago, Milwaukee &c. Ry. v. Tompkins, 176 U. S. 167, 180; in the following cases in which the Circuit Court of Appeals did not review the merits because of an erroneous view of the jurisdiction of the District Court, Guardian Savings Co. v. Road Dist., 267 U. S. 1, 7, Brown v. Fletcher, 237 U. S. 583, 586-8, cf. Louie v. United States, 254 U. S. 548, 551; in the following cases in which the Circuit Court of Appeals restricted its review because it erroneously regarded the action as one at law instead of a suit in equity, Twist v. Prairie Oil Co., 274 U. S. 684, 692, Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 245; in the following cases in which the. Circuit Court of Appeals erroneously narrowed the scope of its review for other reasons, Krauss Bros. Co. v. Mellon, 276 U. S. 386, 394, National Brake Co. v. Christensen, 254 U. S. 425, 432; in the following cases in which the State court placed its decision on an erroneous view of federal law, and, therefore, did not consider the questions of local law involved, Chicago & N. W. Ry. v. Durham Co., 271 U. S 251, 257-8, Sioux City Bridge Co. v. Dakota County, 260 U. S. 441, 445-7, Ward v. Love County, 253 U. S. 17, 25. In all of these cases, this Court recognized its -undoubted power to decide the matters erroneously left undetermined by the courts below; but it preferred to remand the cases for further proceedings, either on the ground that the determination of the undecided issues was too burdensome a task, or on the ground that those issues should more appropriately be decided, in the first instance, by the lower courts.

 Compare “ Distribution of Judicial Power between the United States and State Courts,” by. Felix Frankfurter, XIII Cornell Law Quarterly, 499, 503; “ The Business of the Supreme Court at October Term 1928,” by Frankfurter and Landis, XLIII Harvard Law Review; 33, 53, 56, 59-62.