Valley Rys. v. Mechanicsburg Borough

Opinion by Mr. Justice Walling, This bill in equity was filed to restrain the defendant borough from the collection of a certain annual amount fixed by ordinance as the consideration for the occupation of streets. The case was heard upon bill, answer, replication and testimony. The Cumberland Valley Electric Passenger Railway Company was chartered in 1893, as a Pennsylvania corporation, and in 1900, by a franchise ordinance (No. 133), the defendant borough granted the company the right to occupy certain designated streets, upon conditions therein named, one of which was, “That said railway company, in consideration of the rights and privileges granted by this ordinance, shall pay the borough the sum of Fifty ($50.00) Dollars per annum, said payment to begin two years after the completion of said railway and to continue for a period of three years, at the expiration of which term said annual amount shall be increased to the sum of One Hundred ($100) Dollars, which latter annual sum shall continue for the period of five years, at the expiration of which period the council reserves the right to regulate and determine the future annual payments.” [225] The company accepted the ordinance, occupied the streets and constructed a railway from Mechanicsburg to Carlisle. So far as appears the company and its successors complied with the ordinance, by paying the amounts therein specified, doing the required street paving, etc. In 1911 the town council of the defendant borough duly enacted an ordinance (No. 226), which provides, inter alia, “That the Valley Traction Company, successors to the Cumberland Valley Electric Passenger Railway Company shall pay annually, on or before the first day of August, unto the Borough of Mechanicsburg, Pennsylvania, the sum of Twelve Hundred ($1,200) Dollars. This rate to commence with the fiscal year beginning March 1,1911, and continue until the amount of said annual payment shall be readjusted by ordinance. That said annual payment of Twelve Hundred ($1,200) Dollars be considered solely for the rights and privileges granted in ordinance No. 133, to the Cumberland Valley Electric Passenger Railway Company.” The plaintiff herein, as successor to the former companies, declined to pay the increased annual amounts as specified in the last named ordinance. To recover the same the borough brought an action at law, pending which this bill was filed averring, inter alia, that when the franchise ordinance was granted it was the intention of the parties that the annual charge should be increased, if at all, in proportion to the increase of the earnings and prosperity of the company, of which intent the $1,200 charge was in effect a palpable violation, and praying that ordinance No. 226 be declared void as unreasonable, oppressive and confiscatory, and that the borough be restrained from enforcing the same or any penalties that might be incurred by the company from noncompliance therewith. Defendant denied that the ordinance was either unreasonable, oppressive or confiscatory, or that there was any such intent as above stated when the franchise was granted. [226] The company’s railway, when first constructed, was accessible to a population of only fifteen thousand people; while in 1911, by connection with other lines, it reached a population of over ninety thousand, including the City of Harrisburg. The evidence as to the annual earnings of. the railway was incomplete, being only as to a part thereof, and did not justify a definite finding as to the value of the franchise. The trial court reports there is no evidence to justify a finding of an intention of the parties, when the franchise was granted and accepted, that the rate charged should only be increased in proportion to the earnings of the company; also, “That there is no evidence which would justify the finding that the charge of $1,200 per annum by the defendant for the use of the main street by the trolley company is unreasonable or unduly excessive, or that this amount is in effect confiscatory”; and, upon the presumption that ordinance No. 226 was reasonable and fair, entered a final decree dismissing the bill; from which plaintiff brought this appeal. The case was properly decided. A street railway company cannot occupy the streets of a city or borough without municipal consent: Sec. 9, Art. XVII, Constitution of Pennsylvania; and the municipality may give such consent upon any terms it sees fit to impose : McKeesport v. McKeesport & R. Passenger Ry. Co., 252 Pa. 142; Allegheny v. Peoples N. Gas & Pipeage Co., 172 Pa. 632; Allegheny City v. Millville, etc., Ry., 159 Pa. 411; Cochranton Boro. v. Cochranton Telephone Co., 41 Pa. Superior Ct. 146. Where the consent is granted upon conditions' precedent the railway company’s compliance therewith is essential to the validity of the grant; but where it relates to conditions subsequent, such conditions must be reasonable and within the power of the company to perform: Millcreek Township v. Erie Rapid T. Ry. Co., 216 Pa. 132. See also Johnstown T. Co. v. Ferndale Boro., 47 Pa. Superior Ct. 461. In such case the presumption is in favor of the [227] validity of the subsequent condition imposed, on the assumption that the municipal authorities have acted properly and in good faith: McKeesport v. McKeesport & R. P. Ry. Co., supra ; W. Conshohocken Boro. v. Conshohocken Elec L. & P. Co., 29 Pa. Superior Ct. 7. However, it is a matter over which the courts have jurisdiction and any municipal action relating thereto which is clearly arbitrary or oppressive will be declared void. In the present case, the power of readjusting the rates is expressly vested in the borough council, but as it relates to a condition subsequent, it must be reasonably exercised, so as not to be oppressive or confiscatory, or to have an inevitable tendency to confiscation. See Penna. R. R. Co. v. Phila. County, 220 Pa. 100. Plaintiff’s case fails because the $1,200 annual charge is not shown to be oppressive or confiscatory. Such fact does not appear merely because it is a decided increase over earlier charges, as they may have been much too low, and conditions have changed. Under .the circumstances the borough is entitled to a reasonable latitude and its action will not be declared void unless clearly oppressive ; nor will the court, except in case of a manifest abuse of discretion, substitute its judgment for that of the body to whom the parties committed the right of adjusting the rates. See Carlisle & M. St. Ry. Co.’s App., 215 Pa. 561; Cameron v. Carbondale, 227 Pa. 473; Scranton City v. Straff, 28 Pa. Superior Ct. 258. The annual charge is the price paid by the company for the rights and privileges granted and amounts to a purchase of the franchise, which the borough had a right to sell: McKeesport v. McKeesport & R. P. Ry., supra. It rests upon contract and is in no sense a tax and the right of a borough to impose taxes upon a street railway company is not involved. Neither is it a license fee collectible under the police power of the municipality. Nor is it governed by the rules applicable to taxes and license fees. The appeal is dismissed at the costs of appellant.