City of Cape Girardeau v. St. Louis-San Francisco Railway Co.

Action in equity seeking mandatory injunction to compel respondent to maintain and operate repair shops in the city of Cape Girardeau *Page 596 and to prevent construction and maintenance of shops elsewhere. The action was begun in the Cape Girardeau Court of Common Pleas. The venue was first changed to the Circuit Court of Cape Girardeau County, and later to the Circuit Court of Butler County. Upon trial the temporary injunction was dissolved. Judgment was entered for defendant, and plaintiff was granted an appeal to this court. For convenience, the city of Cape Girardeau will be referred to as "city," St. Louis-San Francisco Railway Company, the respondent, will be referred to as "railway company," and St. Louis San Francisco Railroad Company as "railroad company," as has been done in the briefs. For many years prior to 1911, the railroad company owned and operated a line of railroad within the corporate limits and over the streets of said city. A controversy existed between the railroad company and the city whereby the city claimed damages for alleged breach by the railroad company of certain city ordinances. In 1911 there was enacted by the city and accepted by the railroad company what is known as Ordinance No. 935, by its terms extending and renewing the rights within the city previously enjoyed by the railroad company. Among other provisions of said ordinance was one requiring the railroad to maintain at said city its (then) present shops and facilities for making running repairs, and forbidding the railroad company to construct or operate shops for heavy repairs at any other point within one hundred miles of said city. It is this provision of the ordinance which the city claims the railway company, as the successor of the railroad company, has violated and which the city seeks to enforce in this suit. If it becomes necessary to mention other provisions of said ordinance, relative to undertakings of the railroad company, they will be noticed later. By the terms of said ordinance, the permission, authority and grant of privileges of the railroad company *Page 597 were made to depend wholly "upon the original and continued performance of all the conditions imposed in this ordinance." Said ordinance provided for the forfeiture of all the rights of the railroad company for failure on its part to perform any of the conditions of the ordinance and for a reverter to the city of the rights granted thereunder, and further provided that, after the giving to the railroad company by the city of the specified notice, it should be required to remove its tracks, buildings, depots and property of all kind from said city or suffer forfeiture of such property to the city. It was also provided that, after such forfeiture, the railroad company should "thereafter be relieved and released from any and all duties and obligations to said city to operate its railroad and trains to and through said city." Condition No. 14 of said ordinance is as follows: "The Frisco Railroad Company shall maintain at Cape Girardeau the present shop and facilities, or their equivalent and capacity, for doing what is known as `running' repairs for engines and cars; and that it will not construct and operate shops for what is known as `heavy' or `classified' repairs at any point within one hundred miles of Cape Girardeau, unless it be at Cape Girardeau." Then follow illustrations of what is meant by heavy repairs and by light or running repairs, and a statement showing what lines of railroad are covered by said Condition No. 14. After accepting the ordinance, the railroad company undertook to, and, though probably not entirely within the time specified, ultimately did, do certain things specified in the ordinance of the city, including maintenance of shops for making running repairs. In 1913 receivers for the railroad company were appointed by the United States District Court at St. Louis, at the instance of creditors and bondholders of the railroad company. Under authority granted by the Federal court, the receivers *Page 598 did some of the uncompleted work specified in the ordinance and continued to maintain repair shops in said city. Eventually mortgages securing bonds of the railroad company were foreclosed in the Federal court and defendant, the railway company, became the purchaser of the railroad and property of the railroad company and received a deed therefor. The sale was confirmed August 29, 1916. Within six months after delivery to it of said deed, the railway company filed its election, under the provisions of Article Twelfth of the final decree, whereby it adopted and assumed a great number of contracts, leases etc., of the railroad company and of its receivers. Ordinance 935 of the city of Cape Girardeau was not one of the contracts thus adopted and assumed by the terms of such election. During the late World War, the property of the railway company was taken over and operated by the Federal Government. Ultimately said property and its control and management were restored to the railway company. The facts incident to such Federal control and operation need not be detailed. Shops were maintained by Cape Girardeau during such Federal control and after the property was returned to the railway company. At the trial below the city offered evidence tending to show that, prior to the institution of this action, the railway company had violated and was continuing to violate Condition No. 14 of the Ordinance No. 935 by not maintaining in said city such shops for doing running repairs as existed at the passage of the ordinance, or shops of their equivalent and capacity, and was also violating said condition by constructing and preparing to operate shops for heavy or classified repairs at a point other than, and within one hundred miles of, Cape Girardeau. Numerous questions are presented in the briefs. The railway company contends that it did not accept *Page 599 and adopt Ordinance No. 935, when it purchased the property of the railroad company at foreclosure sale, and is not bound thereby; that the city, having filed an intervening petition in the receivership proceeding in the Federal court and having failed to appeal from the order of that court denying it the right so to intervene, is bound by the decree entered therein; that, to compel the railway company to maintain shops in said city, would be a direct regulation of and burden upon interstate commerce; that the right of the railway company to operate its railroad through said city depends upon a state grant and not upon the grant of said city; that injunction is not the proper remedy; that authority over the railway company shops, if vested in the State, is an authority to be exercised solely by the Public Service Commission, because the State's police power cannot be curtailed or abridged by franchise or contract. The city's contentions are exactly the opposite. The powers of the Public Service Commission in the premises should first be considered, for, if the question of the maintenance of railroad shops at any particular point falls within the police power of the State, delegated to the commission, the courts cannot enforce the maintenance of said Condition No. 14 and the judgment of the trial court dismissing the petition must be affirmed, regardless of any other question in the case. The powers of the Public Service Commission over public utilities are broad indeed. In so far as railroads are concerned Section 10452, Revised Statutes 1919, provides that, "The commission shall have the general supervision of all common carriers, railroads, street railroads, railroad corporations and street railroad corporations as hereinbefore defined, and shall have power to and shall examine the same and keep informed as to their general condition, their capitalization, their franchises and the manner in which their lines and property, owned, leased, controlled or operated are managed, conducted, *Page 600 and operated, not only with respect to the adequacy, security and accommodation afforded by their service, but also with respect to their compliance with all the provisions of law, orders and decisions of the commission and charter requirements . . ." That the commission has been delegated power to make orders requiring railroads to perform provisions of their franchises is clearly provided in Section 10455. Subdivision 2 of said section reads as follows: "Complaints may be made to the commission by any person or corporation aggrieved, by petition or complaint, in writing, setting forth any thing or act done or omitted to be done by any common carrier, railroad corporation or street railroad corporation in violation, or claimed to be in violation, of any provision of law or of the terms and conditions of its franchise or charter or of any order or decision of the commission. Upon the presentation of such a complaint the commission shall cause a copy thereof to be forwarded to the person or corporation complained of, which may be accompanied by an order, directed to such person or corporation, requiring that the matters complained of be satisfied, or that the charges be answered in writing within a time to be specified by the commission. If the person or corporation complained of shall make reparation for any injury alleged and shall cease to commit, or to permit, the violation of law, franchise, order or decision charged in the complaint, and shall notify the commission of that fact before the time allowed for answer, the commission need take no further action on the charges. If, however, the charges contained in such petition be not thus satisfied, and it shall appear to the commission that there are reasonable grounds therefor, it shall investigate such charges in such manner and by such means as it shall deem proper, and take such action within its powers as the facts justify." Ordinance No. 935, passed by the council of said city, approved by its mayor and accepted by the railroad company, *Page 601 constituted the franchise of the railroad company. Assuming, without so deciding, that said ordinance also constitutes the franchise under which the railway company is now operating its said railroad in said city, it is quite clear that the Public Service Commission has been delegated full power to hear and determine all complaints, at the instance of the city or of any person or corporation, that said railway company is violating the provisions or requirements of said franchise. It is equally clear that the commission is empowered to take action or make whatever order on the hearing of such complaint the facts justify. The business of a railroad corporation is to furnish transportation of persons and property. To that end it should be required to have and use such apparatus, equipment, facilities, etc., as are necessary to furnish such transportation safely, efficiently and at reasonable speed. Section 10458 authorizes the commission to make and enforce appropriate orders to provide the equipment, facilities, etc., essential to the rendition of such transportation service. Railroad shops are not specially mentioned in said section, but such shops clearly come within the all-inclusive words "or any other property, construction, apparatus, equipment, facilities or device for use by any common carrier, railroad corporation," etc. A railroad corporation is entitled to earn a reasonable return upon the investment necessary to give such service. The investment necessary to give such character of transportation serves the public. A greater investment than that is detrimental to the public interest for the reason that such unnecessary investment, if forced upon the railroad, may justly call for increased rates for transportation. Suppose a case: In the early days of steam railroading, locomotives and train equipment were much less efficient and road beds less safe than they are now. A one-hundred-mile run then possibly required as many hours of time as a run of two hundred miles now requires. *Page 602 A city one hundred miles from the railroad terminus might then have exacted, in its franchise to the railroad, that such city should be a division point and that during the life of such franchise, the railroad should change engines and train crews at that point. It requires no more than its mere statement to demonstrate that, when locomotives, train equipment and road beds become so improved that a run of two hundred miles can be made by such improved locomotive and train equipment, manned by the same number of employees, with the same case and safety and within the same time formerly required to run one hundred miles, economical and efficient operation demands that the division point be moved to correspond to the improvement in such locomotives, train equipment and road bed. The public interest would suffer seriously if the franchise provision for retention of division point and change of train crews at such city should be held inviolable. Economical and efficient operation would be impossible unless the State or its delegated agency had the power, under the police power of the State, to say that further performance of such provision of the franchise was incompatible with the general welfare. What I am trying to show by the foregoing illustration applies equally in principle to the maintenance of railroad shops. Their location and capacity cannot be determined in advance and irrevocably fixed in a franchise, without the possibility, indeed almost certainty, of injuriously affecting the ability of the railroad to give adequate service in the future at a reasonable cost, and thus cause it to fail to that extent to subserve the general welfare. Section 5 of Article XII of our Constitution provides that "the exercise of the police power of the State shall never be abridged, or so construed as to permit corporations to conduct their business in such manner as to infringe the equal rights of individuals, or the general well-being of the State." *Page 603 Under the foregoing provision, this court has sustained the power of the Public Service Commission, when public welfare demanded such action, to authorize a waterworks company to collect a hydrant rental constituting an increase over an ordinance rate (State ex rel. Sedalia v. Public Service Commission, 275 Mo. 201); to grant authority to a street railway company to charge fares in excess of those fixed by an ordinance (St. Louis v. Public Service Commission, 276 Mo. 509); to fix telephone rates in excess of those named in a franchise (Fulton v. Public Service Commission, 275 Mo. 67); to authorize a street railway company to take up a portion of its tracks which could not be maintained and operated, without confiscating the property of such street railway company or destroying its power to serve the public (Southwest Mo. Railroad Co. v. Public Service Commission, 281 Mo. 52.) In the case last above cited, BOND, J., in discussing the police power of the State, said: "In the exercise of this great lawmaking function, the State is not obstructed by a contract between one of its agencies (cities, towns or villages) and other persons, for the reason that the State cannot alienate any of its sovereign powers which arenecessary to the public welfare, or essential to the protection of the health, morals and property of its citizens. As an obvious corollary of this principle, no municipality, either by ordinance or contract, can impose upon a public utility essential to the welfare of the people, conditions of operation or maintenance which would confiscate its property or destroy its power to serve the public." In some, if not all, of the cases above cited, it was urged, as the city contends in the case at bar, that the particular ordinance or franchise antedated the enactment of the Public Service Law, and that legislation authorizing the commission to increase rates fixed by ordinance or to relieve the public utility of the performance of provisions specified in such ordinance or franchise, *Page 604 deemed to be injurious to or incompatible with the public welfare, violated our constitutional provision (Art. 2, sec. 15) forbidding the enactment of laws impairing the obligation of contracts. The answer to this contention, made in those cases and in fact made in similar cases in other states and in the Federal courts, wherever the question has been considered, is that neither the State nor any of its agencies has or ever has had the power to contract away the police power of the State and that franchises granted or ordinances passed by cities affecting subjects and matters, coming within the police power of the State, must be considered as having been granted or passed with reference to the power of the State, in the exercise of its police power, to legislate with respect to such matters and subjects, unfettered by provisions of such franchises and ordinances. There is nothing in the case of State ex rel. Kansas City v. Public Service Commission, 301 Mo. 179, 257 S.W. 462, cited and relied upon by appellant, which denies the power of the commission over the subject-matter here involved. The majority opinion in that case denied the power of the commission to require a railroad to construct its tracks across a public street in a city, without having first procured the assent of the city, as provided in Section 9850, Revised Statutes 1919. The Kansas City case is not out of harmony with St. Louis v. Public Service Commission, 276 Mo. 509, wherein this court very clearly pointed out the difference between the power of the city to deny to a street railway the right to construct and operate its railroad within such city without its consent and the power of the State to legislate as to matters covered by provisions of the franchise of a street railroad already constructed and in operation, when such matters involve the general welfare. The police power is an attribute of the sovereignty of the State and the Constitution of this State has declared that such power shall never be abridged, even by the Legislature. Subject to this qualification, the exercise *Page 605 of the power rests with the Legislature. The exercise of so much power as has to do with rates and service of railroads and other named public utilities has been delegated by the Legislature to the Public Service Commission. Until this power has been revoked by the Legislature, the power of the commission in the premises is exclusive. We hold that, subject to review by the courts and within limits which do not interfere with or impose an undue burden upon interstate commerce or amount to regulation thereof, the Public Service Commission has the power to determine whether the railway company shall be required to maintain at Cape Girardeau shops for making running repairs and whether it may maintain shops for making heavy repairs at other points within one hundred miles thereof. The ordinance provisions cannot control the action of the Commission, in face of the general public welfare, even if such provision be held to run with the franchise of the railway company, as contended by the city. This view of the case makes it necessary to consider other contentions of the railway company, urged in support of the correctness of the judgment below, and it results that such judgment should be and it is affirmed. White, J., concurs in result; Walker, J., dissents in separate opinion; cause transferred to Court in Banc.