Court Opinion

ID: 7905304
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:59:48.294226+00
Date Added: 2024-06-11T16:32:23.948644
License: Public Domain

Porter, J.
(dissenting) : I dissent from the seventh paragraph of the syllabus and the corresponding part of the opinion. Paragraph 7 of the syllabus reads:
“It is not necessary to obtain the approval of the public utilities commission to a contract made by an interurban railroad company under the control of that commission, with a street-railway company not under the control of the commission, by which contract the interurban company acquires the right to run its cars over the tracks of the street-railway company, and does not modify, restrict, transfer, nor defeat any of the franchise rights of the interurban company.”
The statement of law in this section of the syllabus is based upon a misconception of the facts in the case. Thé interurban company did not by the contract in question acquire “the right to run its cars over the tracks of the street-railway company.” So if that statement be stricken from the syllabus the latter goes no further than to express as a statement of law that it is not necessary to obtain the approval of the public utilities commission to a contract made by an interurban railway company under the control of the commission with a street-railway company not under the control of the commission which “does not modify, restrict, transfer, nor defeat any of the franchise rights of the interurban company.”
There is no room for any dispute about the facts. The interurban company has never operated its cars over any tracks belonging to the street-railway company. It entered the city of Lawrence five years ago on tracks constructed by it on Locust street in North Lawrence for a distance of about one *300mile to the north end of the Kaw river bridge, thence across the bridge on tracks belonging to Douglas county, and from the south end of the bridge it built its own tracks for a distance of about a block and three-quarters on Massachusetts street where its tracks turn to the east side of the street and enter the terminal station of the interurban company. The nearest it approaches any tracks of the street-railway company in the operation of its cars is probably 150 feet. The interurban company obtained a franchise from the city of Lawrence for the construction of its tracks in the streets of Lawrence and the operation of its cars over such tracks. One of the rights obtained by the franchise was the right to charge and collect, and retain in full all earnings for freight, passenger and express charges in the operation of its cars over its own tracks into and out of its terminal station. But the contract which is involved in this case bound the interurban company not only to obtain the franchise' and to build its road on the streets, but also bound it to convey to the Lawrence railway company on demand any portion of those tracks constructed by it upon payment to it of the actual cost of construction of such portion of its tracks; and thereafter such tracks would belong to the street-railway company, and the interurban company should pay for the use of any portion of the tracks so purchased two and one-half cents for each full-fare passenger and one and one-quarter cents for each half-fare passenger carried by the interurban company one way in either direction upon any part of the tracks so purchased, and twenty-five cents per car mile for each mile or fraction of a mile traveled by freight, express or baggage cars of defendant over such purchased tracks. The Lawrence railway company sought to exercise this privilege and demanded the right to purchase a small portion of defendant’s tracks, to wit: the tracks from the south end of the Kaw river bridge to the terminal station of the interurban company, covering a distance of about 800 feet. It tendered the appraised cost, $4,839.14, and demanded a conveyance of so much of defendant’s tracks. Upon defendant’s refusal to make a conveyance, this suit was brought to compel specific performance. The trial court ordered defendant to perform the contract and retained jurisdiction of a cause of action to be heard later in *301order to determine the amount due from defendant to the street-railway company and its successors for all passengers and freight carried by defendant over the 800 feet of track from the time the demand for the conveyance was refused. It is asserted that the sum claimed to be due at the time the case was tried, two years ago, amounted to something like $15,000. Inasmuch as the majority opinion makes no mention of these facts, which are the essential facts over which the controversy arises, it is deemed necessary to state them here.
The interurban company claims that it is a hard, unconscionable bargain which permits the street-railway company without ever having given or furnished anything to the defendant of value to have the right to select the most necessary portion of the tracks beloriging to the defendant (the tracks by which defendant enters and leaves defendant’s terminal station and over which all of its business in and out of the city, passenger, freight and express, is carried), and then demand upon the payment of the initial cost of the construction of this small portion of the track the right to receive such a disproportionate and excessive amount of defendant’s earnings.
It has never been doubted that the word “franchise” includes the right to make profit and gain by the performance of the duty to the public which the holder of the franchise undertakes to do. Stated in another way, the defendant cannot operate its cars in and out of the city of Lawrence without using its terminal station, and for the mere privilege of operating its cars over 800 feet of track it must, for the life of the franchise, by virtue of this contract and judgment of the court, be compelled to surrender every month thousands of dollars of its earnings. It is well-settled law that the holder of such a franchise has no right, without legislative consent, to sell or mortgage its property so as to impair in any substantial degree its ability to perform its public service. This contract is not only a contract “with reference to.” but is one “affecting such franchise or right thereunder” and comes within the express inhibition of the statute which declares as follows:
“Nor shall any contract or agreement with reference to or affecting such franchise or right thereunder be valid or of any force or effect *302whatsoever, unless the assignment, transfer, lease, contract or agreement shall have been approved by the commission.” (Gen. Stat. 1915, § 8364.)
1 The only question for us to determine is, whether this contract is “with reference to” a franchise obtained by a public utility corporation under the control of the public utilities board or, whether it is a contract “affecting such franchise or right thereunder.” The right to collect its fares and earnings is a valuable right granted by the franchise. This contract directly affects not only freight and passenger service, but the rates to be charged for such service, and is of vital consequence to the defendant in the exercise of its franchise rights because its ability to earn affects its ability to properly serve the public.
The legislature did not say in the enactment of this statute that the contract in order to require the approval of the public utilities commission must be one which modifies, restricts, transfers or defeats the franchise right. The language is, no “contract or agreement with reference to or affecting such franchise or right thereunder.”
In the case of Attorney General v. Haverhill Gas Light Co., 215 Mass. 394, the Massachusetts court in construing the effect of a statute forbidding the transfer of a gas company’s franchise without legislative authority, found it necessary to determine the meaning of “franchise” as employed in the statute. In the opinion it was said:
“Its definition depends upon the connection in which it occurs and the property and corporation to which it is applied. It may have different significations. The power to exist as a corporation with the special privileges and immunities personal to the particular organization is a franchise. This in its. nature is not transmissible. The legislature could not have used the word in this sense in the statute. As applied to a gas company, “franchise” means the right to manufacture and supply gas for a particular locality and to exercise the special rights and privileges in the streets and elsewhere which are essential to the proper performance of its public duty and the gain of its private emoluments and without which it could not exist successfully. Memphis & Little Rock Railroad v. Railroad Commissioners, 112 U. S. 609, 619. Vicksburg v. Vicksburg Waterworks Co., 202 U. S. 453, 464.” (p. 399.)
Our s.tatute is much stronger than the one before the Massachusetts court. It goes further than to merely forbid the assignment of a franchise of a public utility company; it declares *303in language leaving scant room, indeed, for any construction of the courts, “nor shall any contract or agreement with reference to or affecting such franchise or right thereunder be valid or of any force or effect whatsoever, unless the assignment, transfer, lease, contract or agreement shall have been approved by the commission.” (Gen. Stat. 1915, § 8364.) If the court can arbitrarily say that a contract of this kind is not a contract with reference to a franchise, or is not one affecting a right thereunder, it will be difficult to conceive of a contract which it could be said the legislature had in mind when the statute was enacted.
The paramount purpose of the enactment of the public utilities law was the protection and enforcement of the rights of the public. Here a controlled public utility has been granted valuable franchise rights to enable it to serve the public, and the legislature has seen fit to provide that having obtained a franchise for the operation of its road, it could not make a contract affecting any right acquired under its franchise without obtaining the approval of the board of public utilities. The contract here is one not only “with reference to” but which very materially affects the rights acquired under the franchise by the interurban company to be paid its full compensation and earnings for the carrying of its passengers, freight, baggage and express in and out of the city of Lawrence. It is a contract peculiarly affecting charges for freight and passenger service and is of the most vital consequences to the defendant in the exercise of its franchise rights.
I am authorized to say that Mr. Justice Burch concurs in this dissent.