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Thus it will be seen that the right of the company to fix its rates was not an implication from the maximum rate prescribed, but was expressly conferred.
State v. Laclede Gas Co., 102 Mo. 472, 14 S. W. 974, 15 S. W. 383, 22 Am. St. Rep. 789, although somewhat different in its facts from the case at bar, seems to favor plaintiff's contention. Pingree v. Michigan Central Ry. Co., 76 N. W. 635, 118 Mich. 314, 53 L. R. A. 274, was also decided upon its own peculiar facts, many of which do not exist in the case at bar. The opinion is a long one, and, in order to be properly understood, must be carefully read. Two excerpts from the opinion, however, will clearly show that the mere fixing of a maximum rate does not give a right to charge up to that rate, but such right can exist only where there are other expressions or circumstances, in connection with the maximum rate, showing unequivocally an intent to confer such right. At page 640 of 76 N. W., and page 330 of 118 Mich. (53 L. R. A. 274), the court says:
"It was not, then, a general grant of power, and therefore limited to fixing rates, the reasonableness of which should be determined by the usual methods, and consequently the same power as any individual or corporation would have without it, but was intended to confer a contract right to fix tolls, within the limit of three cents a mile, as plainly as though it had provided that said road should have the right to charge three cents a mile, or less, in its discretion, for transportation of passengers. It will be noticed in the cases cited that in no case where a maximum rate was fixed has the right of the company to fix tolls to that amount been denied. This case is even stronger than such, inasmuch as the charter expressly fixes the limitation, and unqualifiedly states that such shall be the only limitation of the company's power."
Again, at page 642, 76 N. W., and page 335 of 118 Mich. (53 L. R. A. 274), the court says:
"It is noticeable that in the present case we do not find the section granting the power to fix rates by by-law in the same section that declares that by-laws shall not be in conflict with the laws of the state,' nor do we find a mere general authority to fix rates, nor a mere mention of a maximum rate."
It should be observed here, however, that the statement of the court in said quotation, “it will be noticed in the cases cited that in no case where a maximum rate was fixed has the right of the company to fix toll in that amount been denied,” is manifestly erroneous, because maximum rates were prescribed, and the right of the company to fix tolls to that amount was denied in Banking Company v. Smith, 128 U. S. 174, 9 Sup. Ct. 47, 32 L. Ed. 377.
Borough v. Whitehaven W. Co., 58 Atl. 159, 209 Pa. 166, so far from supporting plaintiff's contention, treats the maximum rate prescribed as a limitation upon, not the grant of a right, and is in perfect accord with the views I have expressed.
Chicago R. R. Co. v. Iowa, 94 U. S. 155, 24 L. Ed. 94, affords no support to plaintiff's contention. The full paragraph from which plaintiff quotes is as follows:
"This company, in the transaction of its business, has the same rights, and is subject to the same control, as private individuals under the same circumstances. It must carry when called upon to do so, and can charge only a reasonable sum for the carriage. In the absence of any legislative regulation upon the subject, the courts must decide for it, as they do for private persons, when controversies arise, what is reasonable. But when the Legislature
steps in and prescribes a maximum of charge, it operates upon this corporation the same as it does upon individuals engaged in a similar business. It was within the power of the company to call upon the Legislature to fix permanently this limit, and make it a part of the charter; and, if it was refused, to abstain from building the road and establishing the contemplated business. If that has been done, the charter might have presented a contract against future legislative interference. But it was not, and the company invested its capital, relying upon the good faith of the people and the wisdom and impartiality of the legislators for protection against wrong under the form of legislative regulation."
All that the court decides in this paragraph is that, if the Legislature had fixed “permanently” a maximum limit in the charter, it might have been a contract against future legislative interference. Indeed, the language of the court implies that the mere fixing of a maximum limit is not a provision against future legislative control, but that, in order to effect this result, the maximum limit must be prescribed permanently in terms.
In Detroit v. Detroit R. R. Co. (C. C.) 60 Fed. 161, the only pertinent fact is found at page 171, as follows:
“By section 8 of the ordinance of 1862 it was provided the rate of fare for any distance shall not exceed 5 cents on any one car or on any one named in this ordinance."
Whether this section should be construed as a grant, which was the final conclusion of the court, or a limitation, which was the court's first impression, depends largely upon other facts of the case, which do not appear, and I am therefore unable to determine its applicability or force here.
City of Indianapolis v. Central Trust Co. of New York, 83 Fed. 529, 27 C. C. A. 580, simply decides that the plaintiff in good faith claimed a vested contract right to charge a higher rate of fare than that fixed in the ordinance assailed, and that therefore the court had jurisdiction of the case.
Moreover, it is to be inferred from the statement of facts that the ordinance fixing the maximum was passed pursuant to a statute of the state which gave power to the street railway company “to make bylaws among other things for regulating the running of the cars and the rate of fares on the road.” If this inference be correct, then it was the statute which gave the power to the company to fix the rates, while the ordinance which prescribed the maximum was but a limitation on that power.
Detroit v. Detroit Cit. Ry. Co., 184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592, is widely and readily distinguishable from the case at bar. The court there held that the rate provisions gave the company a contractual right to charge up to the maximum, on the ground that the ordinance was passed under and pursuant to an act of the Legislature, which expressly directed the parties, that is, the city and the street railway company, to fix rates by agreement. The opinion of the court shows that the meaning it gave to the language fixing maximum rates was demanded by the peculiar circumstances of the case, and that the same language, under other circumstances, would call for a different construction. This idea the court emphasizes as follows:
"It may very well be that language used by a Legislature in merely conferring authority upon a company to fix certain charges for fare might not be regarded as amounting to a contract, when the same language used by parties in fixing rates under a legislative authority and direction to agree upon them would be regarded as forming a contract, because the statute provided specially for that mode of determining them.”
The Supreme Court, in a later case, where the provision as to a maximum rate was that "said company will supply private consumers with water at a rate not to exceed 5 cents per 100 gallons,” said:
"The trouble at the bottom of the company's case is that the supposed promise of the city on which it is founded does not exist. If such a 'promise had been intended it was far too important to be left to implication. In form the words of this part of the instrument are the words of the company alone. They occur in the part of the contract which sets forth the company's undertakings, not in the part devoted to the promises of the city or in that which contains the still later mutual agreements. See Georgia Railroad & Banking Co. v. Smith, 128 U. S. 174, 9 Sup. Ct. 47, 32 L. Ed. 377 ; Ragan v. Aiken, 9 Lea, 609, 42 Am. Rep. 684. They are words of a company which was notified by the act which called it into being of the power expressly conferred upon the city by ordinance to regulate the price of water which the company might supply. People who have accepted, as experience shows that people will accept, a charter subject to such liabilities, cannot complain of them or repudiate them, nor can the company which they have formed. Rockport Water Co. v. Rockport, 161 Mass. 279, 37 N. E. 168. This consideration answers a portion of the company's argument as to its rights under the fourteenth amendment, and makes it unnecessary to consider whether the regulation of water rates is properly to be classed as a police power. It also reinforces our interpretation of the instrument upon which the company founds its claim. We do not mean that under other circumstances words which on their face only express a limit might not embody a contract more extensive than their literal meaning. Detroit v. Detroit Citizens' Street Ry, Co., 184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592. But in that case the rate was fixed by an ordinance which was the language of the city, the ordinance was under a statute which declared that the rates should be established by agreement between the city and the railway company, and neither statute nor ordinance reserved a power to the city to alter rates. In the present case it seems to us impossible to suppose that any power to contract which the city may have had was intended to be exercised in such a way as to displace the municipal power expressly reserved or given by the general law under which the water company was created. It would require stronger words than those used here to raise the question whether, under the statutes in force, the city could do it if it tried. The contracts fixing prices authorized by the statute were contracts between the company and its consumers, not, as in the case of the railway company, a single contract between the company and the city, and were subject to the power to regulate them given to the city by the same statute. We assume that the charter of the city authorized it to contract, but it was not so specific as the statute which we have quoted, and added nothing to the power conferred by that law.” Knoxville Water Co. v. Knoxville, 189 U. S. 434-436, 23 Sup. Ct. 531, 532, 47 L. Ed. 887.
Not only does this last quotation confirm the views which I have expressed of the Detroit Case, but distinguishes it from Georgia Banking Company v. Smith, 128 U. S. 174, 9 Sup. Ct. 47, 32 L. Ēd. 377, which holds, in substance, that the mere fixing of a maximum rate is not a surrender of the power of future regulation. The rate provision in the latter case was as follows:
“Provided, that the charge of transportation or conveyance shall not exceed 50 cents per 100 pounds, on heavy articles, and 10 cents per cubic foot on articles of measurement, for every 100 miles; and 5 cents per mile for every passenger."
And the court said:
"The question then arises whether there is in the twelfth section of the charter of the plaintiff in error a contract that it may make any charges within the limits there designated. * * * It does not matter in the present case whether the term be construed as imposing a condition on the preceding exclusive grant to the company of the privilege of transporting passengers and merchandise over its own roads, or be considered merely as a conjunction to an independent paragraph, declaring a limitation upon the charges which the company may make. If considered as a condition to the enjoyment of the exclusive right designated, then the section only provides that, so long as the maximum of rates specified is not exceeded, the company or its lessee shall have the exclusive right to carry passengers and merchandise over its roads. It contains no stipulation, nor is any implied, as to any future action of the Legislature. If the exclusive right remain undisturbed, there can be no just ground of complaint that other limitations than those expressed are placed upon the charges authorized. It would require much clearer language than this to justify us in holding that, notwithstanding any altered conditions of the country in the future, the Legislature had, in 1883, contracted that the company might, for all time, charge rates for transportation of persons and property over its line up to the limits there designated. It is conceded that a railroad corporation is a private corporation, though its uses are public, and that a contract embodied in terms of its provisions, or necessarily implied by them, is within the constitutional clause prohibiting legislation impairing the obligations of contracts. If the charter in this way provides that the charges, which the company may make for its services in the transportation of persons and property, shall be subject only to its own control up to the limit designated, exception from legislative interference within that limit will be maintained. But to effect this result, the exemption must appear by such clear and unmistakable language that it cannot be reasonably construed consistently with the reservation of the power by the state. There is no such language in the present case. The contention of the plaintiff in error therefore fails, and the judgment must be affirmed.”
Cleveland v. Cleveland Street Ry. Co., 194 U. S. 517, 24 Sup. Ct. 756, 48 L. Ed. 1102, cannot justly be considered a precedent here, since most of the facts on which the decision turned are absent from the case at bar. For instance, the court there said:
"It is undoubtedly true that, immediately before and for a long time prior to the passage of the ordinances concerning the various consolidations and extensions referred to, the respective roads affected thereby were charging a cash fare of five cents over their respective lines, and that the effect of the consolidations and extensions was to secure to the public the benefit of a cash fare of five cents over the whole length of the consolidated and extended lines.”
Again, the court says:
"The statutes show that there was lodged by the Legislature of Ohio in the municipal council of Cleveland comprehensive power to contract with street railway companies in respect to the terms and conditions upon which such roads might be constructed, operated, extended, and consolidated; the only limitation upon the power being that in case of an extension or consolidation no increase in the rate of fare should be allowed.”
In the case at bar, the power to contract, if it exists at all, is but an implied power, and cannot justly be called a “comprehensive power,” such as that described in the above quotation.
In the Cleveland Case it was specifically provided:
“That for a single fare from any point to any point on the line or branches of the consolidated road no greater charge than five cents shall be collected, and that tickets at the rate of 11 for 50 cents or 22 for one dollar shall at all times be kept for sale on the cars by conductors."
The clause, “and that tickets at the rate of 11 for 50 cents or 22 for one dollar shall at all times be kept for sale on the cars by conductors," aids somewhat in giving to the rate provision a contractual character; the words “at all times” signifying the life of the franchise, 25 years.
Again, in the Cleveland Case, the court further says:
"The acceptance of this ordinance by the railroad companies affected: thereby was required to be in writing and filed with the city.”
Again, the court, in that case, said:
“Like provisions were contained in the ordinance of April 8, 1887, authorizing the laying of an additional track and the extension of the lines of the Woodland Avenue & West Side Street Railroad Company, and there was also a declaration, following the authorization of the extension and the rates to be charged on the whole line, that 'the right herein granted shall terminate with the present grant of the main line, to wit, on the 10th day of February, 1908.' The ordinance of August 12, 1887, authorizing a further extension, and the ordinance of June 20, 1892, authorizing the double tracking of a portion of the line, contained similar language."
The clause, “and there was also a declaration, following the authorization of the extension and the rates to be charged on the whole line, that the right herein granted shall terminate with the present grant of the main line, to wit, on the 10th day of February, 1908,' was evidently a circumstance of much weight in the mind of the court; since “the right” which was to terminate on the 10th day of February, 1908, related both to "the authorization of the extension and the rates to be charged on the whole line,” that is to say, “the right” granted, included the matter of rates as well as the extension of the road. Furthermore, this right was to terminate in a specific time, 25 years, or, differently expressed, was to continue for that period.
None of the foregoing circumstances are found in the case at bar, and not only are they made prominent by the court in stating the material facts of the Cleveland Case, but the court, in its summary, presumably to the end, that there might be no mistake or doubt as to the grounds of its decision, and that it might not thereafter be improperly invoked as a precedent, emphasizes said facts as among the controlling circumstances of the case in the following unequivocal language:
"In reason, the conclusion that contracts were engendered would seem to result from the fact that the provisions as to rates of fare were fixed in ordinances for a stated time and no reservation was made of a right to alter, that by those ordinances existing rights of the corporations were surrendered, benefits were conferred upon the public, and obligations were imposed upon the corporations to continue those benefits during the stipulated time. When, in addition, we consider the specific reference to limitations of time which the ordinances contained, and the fact that a written acceptance by the corporations of the ordinances was required, we can see no escape from the conclusion that the ordinances were intended to be agreements binding upon both parties definitely fixing the rates of fare which might be thereafter charged. Taking all the circumstances above referred to into account, the case before us clearly falls within the rule as to the binding character of agreements respecting rates applied in Detroit v. Detroit Citizens' Street Railway Company, 184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592, and approvingly referred to in Knoxville Water Co. v. Knoxville, 189 U. S. 434, 437, 23 Sup. Ct. 531, 47 L. Ed. 887."