Court Opinion

ID: 9767932
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:35:45.200407+00
Date Added: 2024-06-11T07:30:34.955635
License: Public Domain

BARDGETT, Judge
(dissenting).
I respectfully dissent. The basic issue in this case is the extent of power and authority of the Public Service Commission (hereinafter P.S.C.). Put in a more limited way and applicable to this case, the question is whether the adoption of the P.S.C. Act, now § 389.640, RSMo 1969, (hereinafter the Act), by the State of Missouri rendered contracts between certain types of parties, to wit: railroads, which are subject to the jurisdiction of the P.S.C., and municipalities, which prior to the adoption of the Act exercised their police power with respect to railroads by contracts with or ordinances affecting railroads, unenforceable to the extent that such contracts or ordinances concerned the subject matter over which the P.S.C. was given jurisdiction.
Whether the municipality exercised its police power by contract or ordinance should not be of any great concern. This is so because the municipality, prior to the adoption of the Act in 1913, had the power — police power — to do it by ordinance (law).
The principal opinion undertakes to decide whether, in this case, the allocation of costs of improvements is so inseparably a part of the police power so as to require impairment of contractual obligations.
I do not believe that it is for this court to decide whether to give effect to the contractual apportionment of costs by deciding on a case-by-case basis if the apportionment of costs is essential to the attainment of the improvement. It seems to me that by the P.S.C. Act the state has preempted the field and declared as a matter of law and public policy that the P.S.C., and no one else, has the authority to allocate costs.
The language of the Act — -“The commission shall have the exclusive power to determine and prescribe the manner . and the terms . . . apportionment of expenses . . . ” (emphasis mine)— means that it is not left to the courts to determine on a case-by-case basis whether the apportionment of costs was necessary to obtaining the improvement. In other words, I do not believe the continued validity or right of enforcement of the contractual provisions depends upon what this court thinks concerning the relationship between *866obtaining the improvement vis-a-vis the apportionment of costs. The legislature made that decision in 1913 when it adopted the P.S.C. Act and opted in favor of placing the exclusive authority in the P.S.C. In so doing, the state took that part of the police power to itself and ousted municipalities, railroads, and all other entities from exercising it, whether by ordinance or contract.
It would seem that, under the principal opinion, if in a year or so the P.S.C. orders an improvement to be made with respect to one of the viaducts crossing Terminal’s tracks, which street or viaduct was referred to in the 1909 ordinance of Kansas City, then a court will again decide if the allocation of costs to obtain that improvement was inseparably necessary to the objective sought, so that if the improvement cannot be obtained except by allocating some of the cost to the railroad then the allocation will be valid. If the court decides that the improvement can be accomplished by the enforcement of the 1909 ordinance — all costs paid by the city, then the court will again enforce the contract.
I do not believe that is appropriate to determine the question of whether the P.S.C. unconstitutionally impaired the rights under existing contracts on the basis of whether or not the improvement can be obtained without there being an allocation of costs different from the 1909 ordinance franchise provisions.
The 1913 P.S.C. Act does not make the commission’s power to allocate costs dependent upon any such considerations. That Act simply gives the P.S.C. exclusive power to allocate costs. Which controls— the 1909 franchise ordinance or the P.S.C. Act?
In State ex rel. M. K. T. Ry. Co. and Wabash Ry. Co. v. Public Service Commission, 197 S.W. 56 (Mo. banc 1917), the Wabash contended that by virtue of a contract entered into between it and the city of Moberly in 1887 the city had the obligation to pay one-half of the costs of a subway under its tracks. The P.S.C. ordered the improvement and apportioned the costs as follows: Wabash Railway, $18,246; M. K. T. Railway, $14,749; city of Moberly, $11,695.
This court said, loe. cit. 59-60: “Assuming, but without deciding, that the above-mentioned contract was in fact duly executed as the law requires of contracts executed by a municipality, yet the contract cannot avail the appellant [Wabash] in this proceeding, for the reason that such a contract is void as against public policy, in that, if held valid, it would amount to a limitation on the exercise by the state of its police power. This exact point was passed upon by the Supreme Court of the United States in the case of Northern Pacific Railway v. Duluth, 208 U.S. 583, 28 S.Ct. 341, 52 L.Ed. 630. In that case a contract was entered into between the railroad company and the city of Duluth which provided for the construction of a viaduct at a point where one of the city’s streets crossed the railroad. The initial cost was paid, $50,000 by the railroad and $23,000 by the city. The contract provided that the city, for a period of 15 years, should maintain the part of the bridge over the railroad’s right of way, and that the city should perpetually maintain the approaches. Later the viaduct and the approaches became dangerous for public use, and the city under the exercise of a delegated power from the state undertook to require the railroad company at its own expense to make the needed improvement. The city by mandamus proceeding undertook to enforce its order. The railroad company pleaded the contract as a defense. The trial court granted the city the relief prayed. Upon appeal the state Supreme Court affirmed the judgment. 98 Minn. 429, 108 N.W. 269. Upon error to the Supreme Court of the United States the judgment was affirmed, the court saying:
“ ‘The result of these cases (citing) is to establish the doctrine of this court to be *867that the exercise of the police power in the interest of public health and safety is to be maintained unhampered by contracts in private interests, and that uncompensated obedience to laws passed in its exercise is not violative of property rights protected by the Federal Constitution. In this case the Supreme Court of Minnesota has held that the charter of the company, as well as the common law, required the railroad, as to existing and future streets, to maintain them in safety, and to hold its charter rights subject to the exercise of the legislative power in this behalf, and that any contract which undertook to limit the exercise of this right was without consideration, against public policy, and void. This doctrine is entirely consistent with the principles decided in the cases referred to in this court. But it is alleged that at the time this contract was made with the railroad company it was at least doubtful as to what the rights of the parties were, and that the contract was a legitimate compromise between the parties, which ought to be carried out. But the exercise of the police power cannot be limited by contract for reasons of public policy, nor can it be destroyed by compromise, and it is immaterial upon what consideration the contracts rest, as it is beyond the authority of the state or the municipality to abrogate this power so necessary to the public safety.’ ”
In State ex rel. Wabash Ry. Co. v. Public Service Commission, 267 S.W. 102 (Mo.1924), the court had before it an order of the P.S.C. abolishing a grade crossing of the Wabash track and Delmar boulevard in St. Louis. The order required the construction of a viaduct over the Wabash tracks and allocated the costs 40% against the city and 60% against Wabash. Wabash contended that the order impaired its rights under authority of an act of the Missouri legislature, approved March 25,1874, by which the railroad right of way and the grade thereof was established through Forest Park as it still existed in 1924 and that it was provided that the contract between Wabash and the Forest Park commissioners could not be changed without the consent of all parties.
The court held at 108: “It cannot be longer doubted that a railroad holds its right and title to cross or occupy the public highways upon condition that, when such occupancy or use renders them dangerous to human life, the state has the plenary constitutional power to require the railroads to separate the grades and to go under or over the highways, as the state may direct, and impose the entire cost of so doing upon the railroad. Erie R.R. Co. v. Board of Public Utilities, 254 U.S. 394, 41 S.Ct. 169, 65 L.Ed. 322; State v. Public Service Commission, 272 Mo. 650, 199 S.W. 999.”
The court then held: “Nor does the fact that the grade and location of the Wabash tracks through Forest Park were made pursuant to contract between the park commissioners and the railroad, or that the Wabash has leased its tracks to the Rock Island, prevent the state from eliminating dangerous grade crossings at the expense of the railroads. The police power of the state to so require cannot be surrendered by contract or compromise. All such contracts are void. Northern Pacific Railway v. [State of Minnesota ex rel. City of] Duluth, 208 U.S. 583, 28 S.Ct. 341, 52 L.Ed. 630; State ex rel. [Missouri, K. & T. R. Co.] v. Public Service Commission, 271 Mo. [270] 286, 197 S.W. 56; American Tobacco Co. v. [Missouri Pacific R. Co. and] St. Louis, 247 Mo. [374] 433, 157 S.W. 502.” (emphasis mine.) 267 S.W. 108.
Kansas City v. Kansas City Terminal Ry. Co., 25 S.W.2d 1055 (Mo. banc 1929), known as the Second Oak Street case, upheld the validity of the same contract that is the subject matter of the instant case. The opinion in the Second Oak Street case sought to distinguish the Moberly case with reference to allocation of costs under a pri- or contract as opposed to an allocation made by the P.S.C. by saying at 1066: “Contracts with reference to the construction of crossings have been held void primarily on the *868ground that they were without consideration. Such was the Moberly Case. State ex rel. v. Public Service Commission, 271 Mo. 270, 197 S.W. 56.” But this court in the Moberly case did not declare the contract void for lack of consideration. The court explicitly declared the contract void “as against public policy, in that, if held valid, it would amount to a limitation on the exercise by the state of its police power.” (emphasis mine.) 197 S.W. at 60.
The Second Oak Street case then went on to say that the Moberly case followed Northern Pacific Railroad Co. v. Minnesota ex rel. Duluth, 208 U.S. 583, 28 S.Ct. 341, 346, 52 L.Ed. 630, and quoted the first portion of the second to last paragraph in that case. The entire paragraph has been quoted supra in this dissent. It is seen that the United States Supreme Court was first setting forth the holding of the Minnesota Supreme Court from where the case came to the U.S. Supreme Court by saying that the Minnesota Supreme Court said that “any contract which undertook to limit the exercise of this right was without consideration, against public policy, and void.” (emphasis mine.) The U.S. Supreme Court went on to say that the Minnesota ruling was consistent with the principles in cases decided by the U.S. Supreme Court and then recognized the railroad’s contention that the contract between it and the city of Duluth ought to be given effect because it was a compromise of doubtful rights. That statement was made to support the railroad’s contention that there was contractual consideration for the agreement. The U.S. Supreme Court then gave its own decision on the matter and in it recognized that there could be and would be agreements that had been entered into between railroads and municipalities which, if the parties had the right to contract on the subject matters, would be valid, and struck down all such contracts regardless of the existence of contractual considerations. The language is all pervasive. The court went on to say, 208 U.S. 583, 28 S.Ct. 346: “But the exercise of the police power cannot be limited by contract for reasons of public policy; nor can it be destroyed by compromise; and it is immaterial upon what consideration the contracts rest, as it is beyond the authority of the state or the municipality to abrogate this power so necessary to the public safety. Chicago, B. & Q. R. Co. v. Nebraska, 170 U.S. 57, 18 S.Ct. 513, 42 L.Ed. 948.”
In 1936 division two of this court decided the case of State ex rel. St. Paul & K. C. Short Line R. Co. v. Public Service Commission of Missouri, 92 S.W.2d 126 (Mo.1936). That opinion claims to follow the Second Oak Street case, the Moberly case. M. K. & T. Ry. Co. v. Oklahoma, 271 U.S. 303, 46 S.Ct. 517, 70 L.Ed. 957 (1926), is referred to as being exact converse of St. Paul & K. C. Short Line. In the St. Paul & K. C. Short Line case, the railroad and Caldwell County agreed upon a plan of grade separation which was filed with and approved by the P.S.C. They also agreed that Caldwell County would pay $10,000 in yearly installments of $500 as its part of the cost and this agreement was recognized by the P.S.C. The railroad was to construct the viaduct and did so at a cost in excess of $23,000. Caldwell County refused to pay its agreed-upon share so the railroad filed a petition before the P.S.C. to apportion the cost. The commission dismissed the petition on the ground that the agreement between the railroad and Caldwell County controlled and therefore the commission lacked jurisdiction in the matter. The commission was affirmed by the Circuit Court of Cole County and the railroad appealed to this court. Division two of this court reversed the commission. In so doing, the court said, 92 S.W.2d 129:
“Frequently in the separation of grade crossings of our state highways and railroad tracks, the highway department and the railroad companies submit agreed plans for the separation, as well as the apportion*869ment of cost. If, upon an examination, the plans of separation meet with the approval of the Public Service Commission, the commission adopts the plans and enters an order to that effect. The commission should follow the same procedure with reference to the apportionment of the cost. The apportionment agreed upon should be examined, and if found satisfactory and equitable, the commission should enter an order in the same manner as with reference to the plans of separation. In other words, the apportionment of the cost should be by order of the commission. It has never been contended that in a case where a railroad company and the highway commission have agreed upon a plan of separation which had been submitted to the commission, that that involves the interpretation of a contract. It is conceded that such an agreement is not binding on the commission. Under the ruling made in the Moberly Case and in the Oak Street Viaduct Case, by the court en banc, agreements of the kind now before us stand on the same footing with agreements as to the plans of separation. Statute, section 5171, R.S.Mo. 1929 (Mo.St.Ann. § 5171, p. 6585), grants to the commission ‘the exclusive power to determine and prescribe the manner, including the particular point of crossing, and the terms of installation, operation, maintenance, apportionment of expenses,’ etc., of all grade crossings and the separation thereof. The only limitation in this statute upon the power of the commission is that it is authorized to assess not more than one-half of the cost of a separation of a grade crossing, between a railroad company and a highway, against the highway department. In cases, therefore, as the one now before us and the Moberly Case, agreements between cities, counties, or the state, and the railroad companies, as to the apportionment of cost of separation of grades, are no more binding upon the commission than an agreement as to the plans of separation.”
Thus it is seen that division two of this court held a contract for the apportionment of costs of a specific viaduct where the railroad had fully performed void and remanded the matter to the P.S.C. for apportionment of costs.
The holding in the St. Paul and K. C. Short Line case is compatible with the Mob-erly case and the Northern Pacific v. Duluth case, supra. It is incompatible with M. K. T. v. Oklahoma, supra, unless M. K. T. v. Oklahoma is distinguished on the same basis as set forth in Judge Blair’s dissent in the Second Oak Street case, and as set forth in City of Chicago v. Chicago and North Western R. Co., 4 Ill.2d 307, 122 N.E.2d 553 (1954). The distinction set forth in both cases is that M. K. T. v. Oklahoma represented a situation where the contract ordinance was, in effect, an agreement or settlement between a city and the railroad in lieu of eminent domain proceedings as to a specific point on the railroad property where the city could make a crossing. In other words, it was the settlement of condemnation damages.
I believe the distinction made in Judge Blair’s dissent in the Second Oak Street case and by the Illinois Supreme Court in City of Chicago v. C. & N. W. R. Co., supra, to be correct. In M. K. T. v. Oklahoma, supra, the Supreme Court of the United States in saying that the railroad would be deprived of its property without due process of law was, in my opinion, talking about the real property of the railroad which could only be taken by eminent domain proceedings in the absence of an agreement whereby the railroad granted a right of way to the city for the Comanche Street crossing.
In City of Chicago & C. & N. W. R. Co., supra, and its progenitor, City of Chicago v. Illinois Commerce Comm., etc., 356 Ill. 501, 190 N.E. 896 (1934), the Illinois Supreme Court struck down a contract and a Chicago ordinance by which the apportionment of costs as between Chicago and the railroad company was controlled on the grounds that the Illinois Public Utilities Act vested the exclusive authority to apportion the costs in the Illinois Commerce Commission.
*870The Missouri Act also vests exclusive authority in our P.S.C. to apportion the costs and should, in my opinion, be given effect and, as stated in Erie R. Co. v. Board of Public Utility Com’rs, 254 U.S. 394, 411, 41 S.Ct. 169, 171, 65 L.Ed. 322 (1921), “Contracts made by the road [railroad] are made subject to the possible exercise of the sovereign right.”
It must be accepted, I think, that our P.S.C. Act did render unenforceable certain rights which under the laws relating to private contracts could not have been voided under the provisions of the United States and Missouri constitutions relating to impairment of contracts. But this is not unconstitutional where, as here, the police power constitutes a continuing obligation upon the state to oversee railroad operations vis-a-vis improvements necessary to the public. And this obligation, in my opinion, must be exercised as the need arises. It cannot be permitted to lie dormant for a period of 200 years, the term of the contract ordinance in the instant case, under a theory that the ordinance contract was an exercise of police power and not an abandonment of it.
The two Illinois cases cited supra held the power of the commission to apportion the expense of improvements was inseparable from the power to determine its necessity and manner of accomplishment. I agree with the Illinois Supreme Court’s holdings and believe the Missouri Act requires the same interpretation. As stated supra, it is my opinion that the Missouri legislature made that decision when it enacted the Act in 1913.
I agree with the ruling in the principal opinion that the 1963 amendment to § 389.-640 which required the commission to accept any agreement entered into after the effective date of the amendment for allocation of crossing costs is not controlling in this case. That amendment does not, in my opinion, validate the type of ordinance contract involved in this case even if it were entered into after the amendment became effective. The entire context of the amendment shows that it is operative only where a specific improvement has been ordered by the P.S.C. and as to that particular improvement the parties have agreed upon a cost allocation. The constitutionality of that amendment, even in its limited scope, is not before the court in this case.
The P.S.C. order in this case allocated 90% of the cost of repairs of the viaduct to the city and 10% to the railroad. The costs of construction were allocated 100% to the city. The costs of the engineering study were allocated 90% to the city and 10% to the railroad, as were the expenditures by the railroad of $148,663.48 for the Oak Street viaduct repairs.
The only evidence presented to the commission was a traffic count made by the railroad which showed the number of motor vehicles using the viaduct and the number of trains (not railroad cars) passing under the viaduct. The city put on no testimony with respect to relative benefits, etc. Apparently this was because this court in the Second Oak Street case upheld the validity of the 1909 ordinance and the city relied upon that decision before the P.S.C. Regardless of that, the city should have come forward with evidence bearing upon cost allocation, and had there been substantial and competent evidence to support the allocation order entered, I would not favor a rehearing on that issue. As the record stands, however, the allocation that was made by the commission is not supported by competent and substantial evidence. It is simply unrealistic to base an allocation order involving projects of this size on a comparison of one automobile with one train, particularly when the train may consist of anywhere from one to 150 or more railroad cars. Other factors may also affect the commission’s order allocating costs which may be presented to the commission on remand.
*871For the reasons stated in this dissent and those stated in the dissent of Seiler, J., I would overrule Kansas City v. Kansas City Terminal Ry. Co., 324 Mo. 882, 25 S.W.2d 1055, and hold that the exclusive authority to allocate costs mentioned in § 389.640 is in the Public Service Commission and that the 1909 ordinance involved in this case is void insofar as it undertakes to allocate costs of a crossing improvement over a 200-year period.
However, because, in my opinion, the allocation order with respect to the building of the improvement was not based upon substantial and competent evidence, I would reverse the order of the circuit court which affirmed the order of the commission and remand the matter to the commission for a full hearing on the cost allocation question.
For the foregoing reasons, I dissent.