400

REPORTER.

or qiminish the rate of fare. to Qecharged; and the company, at the time ioi the consolidation, was,qperating its.r.oad apdcharging a casbvfare of five cents, as in the ordinances of the city. Under the consolidation it was proposed to operate all the lines of tlle' two. constitueut companies. as an entire flystem, to operate through ears thereon, l;llld pernijt .passengers, for one fare of five cents, to ride from one end of said line so consolidated to the other; and, sucbbeing the purpose of ,the consolidation, on May 13, 18H3, a communication was addressed to the common council of the city of Cleveland, as follows:
'Tofhe Honorable Council of the City of Cleveland, Ohio: The Woodland AvenUe .8f,West Side Street-Raill'Qad Company and the Cleveland City CableRailway COmpany have agreed to consolidate their two lines into the Cleveland City Railway Company; the consolidation to Lire effect June 1st, lSlJa. It is proposed; 'on June 1st, 1893, to immediately issue proper transfers, without extra chal'ge, so that passengers on any line of the Woodland Avenue & West Side Street-Railroad Company may be transferred to and have a continuous passage upon any line of the Cleveland, City Cable-Railway (jompany within the limits of the city of Cleveland, and also so that passengers upon any line of the Cleveland City Cable-Railway Compilny may be transferred to and have a continuous ride upon any line of the Woodland Avenue & West Side StreetHailroadQoll}pany within the city of Cleveland; . only one fare to be charged for such ride. And, as soon as the necessary improvements can be made, additional crpss-town lines will be run, and only one fare charged for a continuous additional lines within the city of Cleveland." ride upon

On May 15, 1893, the common council 'of the city passed a resolution approving and consenting to the consolidation of the companies and the operation of cars upon the terms statep. in said communicati.on. It appears in evidence that since the consolidation forming the said complaillant company the Cleveland City Railway Company it has continued the operation of its various, lines of street railway,as proposed in said communication; has' continued to charge. the .same cash fare of 5 cents for each passenger; has put in force the system of transfers contemplated in the council resolution; and has kept on .sale tickets at the rate, of 11 for 50 cents or 22 for $1. It also appears that no one otthe grants under which the cOllstitue;nt companies which formed ,said complainant were authorized to operate their cars on their various lines of rail- . way at a cash fare of 5 cents, and to sell tickets at the rate of 11 for 50 cents, has expired, but and all of said ordinances are in fug force,. and that none of !'laid gJ,'Rnts ex,pire prior to the 1908.. This being the situatiou,. f:an the city successfully contend that reservation in the ordinance of 1879 rel'ating to the Kinsman Strf3et Railroad Company is now operativ;eas respects the complainant the City Railway Company? Prior to 1885, the West Side Street-Railro.ad Company w,as operating upon the west side pf the Cuyahoga There was no interchange Of traffic by transfer between it and the WQpdland Railway Company, and passengers were obliged to ,pay a .cash fare upon each road. ,The West Side Company was operating under a grant running for 25 years from February, 1883,entitling it to charge a cash fare of.fiye cents. The consolidation of the Woodla:nd Avenue and West Side Companies was made upon the condition tbat a

CLEVELAND CITY BY: CO. V. CITY OF CLEVELAND.

401

new through line of street railroad should be established, so that for a single fare passengers should be carried from any point to any point on the lines or branches of the consolidated company. Upon the taking effect of this consolidation, the relations of the two companies to the city were so far changed that, whereas the companies before had operated independent lines of railroad, and charged separate fares, a new through line was established, and a rate of fr.re fixed upon the entire line of five cents. 'fhe right to so charge five cents, and to carry at ticket fare at the rate specified, of course involved the right to charge such fare for the whole or any portion of the distance traveled on the line. It was competent for the companies and the city to at that time agree with respect to the terms and conditions, including the rate of fare, upon which. this through line should be operated. The parties did make such contract, and one of the terms of the contract related to the rate· of fare to be charged over the entire line; and part of the line with respect to which the rate of fare was so fixed in 1885 was the samQ line referred to in the Kinsman Street-Railroad C<>mpany ordinance of 1879; that is to say, the city and the railway companies, in 1885, contracted with respect to the same subject-matter referred to in the ordinance to the Kinsman Street-Railroad Company in 1879. This ordinance of 1879 at the time related solely to, the rate of fare upon Kinsman street, operated as an independent line. 'l'Le ordinance of 1885 is a contract with respect to the same· subject-matter, but establishes a rate of fare which should apply to the Kiilsm:m Street Line, not as an independent line, but as part and parcel of a direct through line from the southeasterly to the westerly part of the city. It is to be observed that no reservation is contained in this ordinance of any right to increase or diminish the rate of fare therein fixed, and the right to operate under this ordinance of 1885 was in full force in October, 1898. It must follow that no power existed in the council, in 1898, to change the rate of' fare which had been so established by agreement between the parties. Again, it is apparent that the existence of any such reservation is inconsistent with the right which is expressly granted. by the ordinance of 1885. The consolidated company certainly acquired the right to carry to the end of the term at five cents over the entire line or any portion thereof. This right could not co-exist with a right in the council to reduce the rate of fare during the period, as respects a portion of the line. By the contention of thecity the right to reduce could now only be made applicable to the' Kinsman Street Line and its extension. The city, however, contracted in 1885 that the company might carryover the Kinsman Street Line, as part of the through line"at a cash fare of five cents;. from which contract it necessarily follows that the entire contract relations of the company and the city, as respects the rate of fare' to be charged on the Kinsman· Street Line, were merged in the contract of 1885, and the subsequent ordinances by which the Kinsman Street Line ceased to be independent, and became part and parcel of a through line, upon which a rate of fare for the full period aithe grant was established. By the subsequent ordinances.
94

402

Companies, it is, as respects each of them, as before pointed out, expressly provided that their conditions, as respects fare,lil,hall be applicable to the entire main line of the company, that the rate of fare shall continue to be five cents until the expiration of the several grants, and that the grants do not expire until the 10th day of FebruarY,1908. Again, in determining the contract rights of the complainant company, regard must also be had to its rights under the grants to the Oleveland City Oable-Railway Company, which the present company acquired by the consolidation of 1893. The cable company had the right to operate, at a cash fare of five cents, its independent lines of railway. By virtue of the consolidation, its various lines became part of a great through system, operated by the consolidated company, whereby the public acquired the right of a continuous passage over the entire line for one fare of 5 cents,or ticket fare at the rate of 11 tickets for 50 cents or 22 for $1. The consolidated company, by virtue of such consolidation, acquired all the rights which had before pertained to the constituent COmpanies with respect to the rates of fare which it was lawful to charge, except so far as·' it had voluntarily modified the same by entering into the consolidation; and it then became the duty of the company, and in the performance of such duty it acquired a corresponding right to carry over its entire line, or any portion thereof, at a cash fare of five cents. A portion ·of the entire system which this company is now operating under ,these several grants from the city; was formerly the line of the ,Kinsman Street Railroad Oompany, and the reservations under whicl:l the city now claims the right to reduce rates of fare upon the portion of the line which wasf(mnerly the Kinsman Street Line was made with reference to, and 'can only have reference to, the operation of the Kinsman Street :Line· as an independent line. ':& ow i the situation has so far changed that, byoperaWm oflaw, and by express contract with the city of Cleveland, this original Kinsman -Street· Line· has become part and 'parcel of a through line,a:ild,,'as respects the rates of fare whichm.ay be'charge<il upon such through line, the 'city and the railway 'company have' entered into various contracts expressly fixing thetates of :flare to be charged 'over the through 'Une, or any part tbereof. . If the ordinances, as·respectsrates Of fare, whichwebave been examining,passed since 1'879, are to be construed as statutes, it folbeen$>assedsubsequent to the ordinance of 1879 lows that, relating hH:be Kinsman Street Railroad Oompany and relating to the same stlbject-matter, they are so far inconsistent with the ordinance 'of 1879 as to operate as a repeal thereof. If, we treat these sUbsequent ordinances simply as contracts, it is apparent that, having 'entered into.a contract in 1879, the city has subsequently entered into various o1her contracts relating to the same subject, and that these later contracts are so far inconsistent with the proviSions of the original ordinance as that the rights of the parties'must 'now be measured by theil" latest contract, and not by the original agreement. Again, the inconvenience, if not the

. of 1887 and 1892, running to .the Woodland Avenue and WestSide

94 FEDERAL- REPORTER·

CLEVELAND CITY RY. CO. V. CITY OF' CLEVELAND.

403

absolute impra.cticability, of enforcing the obligations of both the original ordinance of 1879 and the subsequent ordinances, in and of itself must well-nigh force the conclusion that the rights of the parties must be gathered from these later, rather than from the original, ordinance. The complainant company confessedly has the right by contract to carryover its entire line, or any portion thereof, at a cash fare of five cents, and this it may do until its present grants expire in the year 1908; and what the city proposes, by the of 1898, is to compel the company, as respects a portion of this line,to carry at a cash fare of four cents. The right to carry 'at five cents over the whole line, or any portion thereof, is inconsistent with the obligation to carry for less than five cents over some portion of the through line. His apparent that the relations between the city of Cleveland and the complainant, as the successor of the various companies out of which it has been formed, have been so far changed by subsequent ordinances and contracts and consolidation, that the reservation contained in the ordinance of 1879 relating to the Kinsman Street Railroad Company, and authorizing the council to thereafter increase or diminish the rate of fare upon such line, is not and cannot now be made operative, legally, as against the complainant company, the Cleveland City Railway Company. By reason of the various ordinances and contracts which the complainant company and its predecessors have entered into with the city of Cleveland since the ordinance of 1879, the various railroad companies assumed different and much larger obligations in the carrying .of passengers than were imposed upon the Kinsman Street Railroad Company by the ordinance of 1879. In almost every instance, the company agreed to carry passengers further; and at the time of the consolidation of the Woodland Avenue and West Side Companies the service which the railway company agreed to give to the citizens desiring to ride as passengers, it may fairly be said, was doubled, and the city and its citizens received from the railway company large and valuable concessions, whif'h concessions formed a part of the consideration for the passage of the ordinances and the making of the contracts. No other conclusion can be reached than that the relations between the city of Cleveland and the complainant, as the successor of the various companies out of which it is formed, have been so far dianged by the various contracts entered into since 1879 that the city is estopped from claiming that the reservation contained in the ordinance of 1879 can now be used to either increase or diminish the rate of fare upon a small portion of the line of the Cleveland City Railway Company. As respects the complainant the Cleveland Electric Railway Company, a very similar question is presented by the ordinances before the court. The city contends for the validity of the "Low Fare Ordinance," passed, as respects this last-named complainant, by virtue of an ordinance passed in 1879, granting a renewal of franchise to the East Cleveland Railroad Company. By this ordinance, set forth in the bill, the East Cleveland Railroad Company and its successors were authorized to reconstruct, maintain, and operate

404

94 FEDER,AL REPORTER.

a railroad from Superior street easterly through designa,ted streets, including Euclid avenue, to W;illson avenue; and by sectiou6 of said ordinance it was p,rovided:
"Said company shall not charge' more. than. five cents fare each way for one passenger over the whole or any part of the line herein rellewed, but said company may charge a reasonable compensation for carrying packages, The council, however, reserves the right to hereafter increase or diminish the 'rate of . fare, as it may deem justifiable and expedient."

It by the'/lllegationsot, the bill and in proof that prior to the 15th day of :(879, the EastOleveland Railroad Company was a line, of railway the intersection of Superior and Water. streets to,·the easterly limits of the city, on Euclid avenue, under various .grants, some of which emanated from the others from the county commissi()ners, and others from the authorities of. the village of East Cleveland prior to its annexation to the city. At that time there was out a single track east of Willson avenue UpOIl, Euclid avenue, and company, under its grants, bad the right to chllrge passengers one fare from Water street to. Willson avenue, another. from Willson avenue to Fairmount street, and '8tm another .from Fairmount street east; and was, in fact, charging two fares of five cents each, each way between Water street and the city limits. This was the situation when the council passed the ordinance of September 15.,.1879, conreservation with respect to fare, under the city claims the right to pass and enforce the ordinance of October 17, the passage of this ordinance, the company continued 1898. the operation of its line thereunder up to April 4, 1883, and, as it was permitted to do, charged one fare between Water street and Willso,q avenue, and an additional fare of five cents from Willson avenue easterly to the end of its On April 4, 1883, the council passedatlr whichwllS accepted by the company, granting it the right tol;mild and operate an additional track on Euclid avenue, between 'Willson avenue and the easterly line of Fairmount street,making a double-track line. This ordinance contained a provisiOl1 and reservation, as ,respects fare, in simila,r terms to that of the oJ!dinance of 1879. Under this ordinance of 1883 the company agreed to carry passengers over its line as far east as the city limits for five cents. It did not I)1ake any agreement to run through cars, and for the next three years it did in fact only run a portion of its cars through. It was. under no obligation to give transfers at 'Willson avenue" and was in fact not giving such transfers.It is alleged in the bill, and in proof by affidavit, that this arrangement and operation of the cars was unsatisfactory, both to the company and to and in March, 1886 (see Rev. Ord. p. 826), the council passed an ordinance entitled "An ordinance granting to the East Cleveland Railroad Company the right to extend and operate its d.ouble-track street railroad on Euclid avenue between the easterly line of Fairmount street and the easterly limits of the city." By section 3 of this ordinance the company WllS required to pave 14 feet,-anobligation which did not pertain to its t.hen contract with the city; and, by section 4 of

CLEVEJ,AND CITY RY. CO. V. CITY OF CLEVELAND.

405

the ordinance, the following provision is made, as respects the rate of fare to be charged by the East Cleveland Company over its entire line, which included the line referred to in the ordinances of 1879 and 1883:
"The rights as herein granted and conferred are upon the express condition, . however, that said compal1'Y shall charge and collect but one fare of not more than five cents for each passenger one way in either direction, between the easterly limits of the said city on Euclid avenue and the westerly terminus of said company'a tracks at the intersection of Superior and Water streets; and upon the further condition that the said company shall run thl'ough cars over said line between said points last named in each direction, as the public convenience and the opinion of the common council, by resolution expressed, may require."

Seetion 5 of this same ordiilanee provides:
"1'he rights herein granted to lay and operate a double-track street railroad on Euelid avenue between Fairmount street and the easterly limits of the city shall and determine on the 20th day of September, A. D. Ul04, as provided for said company's tracks on Euclid avenue west of Fairmount street."

It is apparent feom an inspeetion of this ordinance of 1886, in conneetion with admitted circumstances surrounding its passage, that the eouncil was then fixing and agreeing upon a rate' of fare to be ('harged upon the entire line of the East Cleveland Railroad Company, and during thE: entire life of the franchise, which did not expire until 1904; and nowhere in this ordinance is contained any in the city council to thereafter change the mte of fare therein prescribed. It also appears in the making of this contract that the city received additional consideration, namely, the obligation of the eompany to pave an additional space upon the street. and the requirement for the operation of through cars. In 1883 the reservation contained in the ordinance of 1879 had been repeated, in substanee. in the ordinance of that date, but in 1886, the council, for the first time, legislates or contraets upon the subject of fares to be eharged in connection with the operation of through cars and a double-traek street railroad. and it entirely omits the reservation .:ontained in the fmmer ordinanees. This ordinance of 1886 was a ('ontraet. stilI in fuII force and effect. It in express terms prescribed the rate of fare whieh the company shall charge in the operation of its line upon Euelid avenue, and in express terms provides that the conditionE and obligations of such ordinance shaII remain in force until the ,veal' l[H)4; and it makes this obligation to so operate through ears and rnaintain a double-track road, and to charge but five fare oYer the entire line, continue as long as, and terminate with, the ordinance of 18iH; and this ordinance of 1879, so referred to, is the ordinance in which is contained the reservation upon which the (oitv bases its contention as to the validitv of the redudion of fare atteullited to be made in Ol'tobel'. 18!l8. It Is perfectly apparent that it could not have been in the minds of the palties contrading that the reservation of the right to regulate fare in the ordinance of 187!J could be operative after the express contract in relation to fare for the entire period of the grant, as made by the ordinance of 1886. Again, the council having. in the ordinance of 1879, reserved the right to thereafter increase or diminish the rate of fare, did, in 1SSG,

94

FEDEnAL REPORTER.

,oftb:is of fare the of. .tlW. ordinance up tp ol the grant made in '1879; 's'o that' itmayperbaps be fairly said that the ,ordinance of 1886 was an exercise of ,the reserved, rigbt of regulation conptined in the ordinance, 0(1879: But, it be treated stich right, intoofa ,new contract, it is plain that, after the passage and ,acceptance of,tbe ordinance of 1886, there no longer remains in the city ,council a 'right to increase ordimihish tberate of to be charged ripon that line until the .ofthegrant of 1886, to ;Wit, the year'1994, Again, in 1888, an ordinance was passed granting the East Oleveland Railroad Oompany the right to construct and ope:r;ate its road by electricity on Euclid and Oedar avenues. In this ol'dinance, it is recited:
there Is a on the part'of the 'people residing in the easterly portIon of, tlIe city for a Illore convenient and rapid mo(1e of transit, and that an eleclric'systelll be substituted for, auj):nal pQwer for the movement of cars: therefore, tbe' East 'Cleveland Railroad' Company is hereby granted permission," r etc. '

in

And ill seetio:n l) of the ordinance it is provided:
"Nothing hereIn shall be so construed as to authorize any' increase of present fare for transportation (lver any portion of said Company's line." .. .
"

nance,at. the expense. of a very large, aUlount ,of Uloney,changed its construction as contemplated" ,continued, :UteI' electricity was put in,. to operate any increl:J,seof, fare. It is apparent that the ",present fare" referred to,hl of. 1888 must have company was then charging, and had reference tel the fare as fixed in: t)le, ordinance of 1886, namely, a cash fare of five cents. In cOn,sideratiQn of thl!! icompany's SO equipping' its line with electricity, SQ agreeing Aocarryat "present fare," this same ordinance granted an extension of franchise for 25 years from July 13, 1888. By vjrtue of tbis ordinance,read in connection with the ordinance of 1886, the cQmpany acquired thereby the right to operate its line fora period of 25,years from that date, at the then present rate of fare r,eferred to in the ordinance, namely, a cash fare of five cents. In 1889, an ordinance was passed, granting the East Cleveland Railroad Company the right to construct what is known as the ''Wade Park Avenue Line," and, by section4 of this ordinance, it is provided:
I

It appeaI'l$in evidencE/,t:\1,at the cOUlpany, having accepted this ordi-

"Permission is granted upon the' express condition that no increase of fare shaH be charged by said company on any part of its main line or said extension, and but one fare, not exceeding ,five cents, or one of s(iid company's tickets, shall entitle 'a passenger to transportation over the main line and extension from the intersection 'of Lake and 'Vater streets to the easterly limits of the city, or from the easterly limits of the 'city to the intersection of Lake and Water streets."

This provision as to fare coverli'! a portion of the Euclid Avenue city that a reserved Line, with respect to whicli it is claimed by right exists ,to regulate fares unqer the ordinance of 1879; but the council, as in the ordinance of specifies the fare to be five cents, and, upon this Wade Park AvenueLine, from and Water streets to Oase avenue, there could be no longer any rIght to reduce
l

CLEVELAND CITY BY. CO. V. CITY OF CLEVELAND.

407

fare, as the extension is made upon the condition that the company will thereafter carryover the entire Wade Park Avenue Line at a cash fare of five cents or a railroad company's ticket. Prior to June 1, 1893, the Broadway & Newburgh Street Railroad Oompany, the Brooklyn Street Railroad Company and the South Side Street-Railroad Company were corporations operating independent lines of railway in the city of Cleveland, each of them operating under contracts or grants from the city, and charging, as authorized in the ordinances permitting their operation, a cash fare of five cents. As to no one of these companies was there any right remaining in the city council to increase or diminish the rate of fare during the period of the several grants. Thege companies, about June 1, 1893, consolidated with the East Cleveland Railroad Company, forming the complainant the Cleveland Electric Railway Company. The city council consented to the terms of such consolidation under the following terms and conditions:
"Only one fare shall be charged for a continuous ride on or over any line of railway formerly owned by said constituent companies. and any line of an J' other of the said constituent companies witbin the limits of the city of Cleveland; and passengers on any of such lines paying one fare shall be entitled. without additional or extra charge, to be transferred to any other of said lines, and have a continuous ride thereon, for said single fare."

But it is evident that the one fare here mentioned must have reference to the present fare then charged by the constituent companies, namely, a fare of five cents. It thus appears that, by virtue of the ordinance of 1886 the East Cleveland Railroad Company was authorized to operate its line and cars to the end of its term at a cash fare. of five cents; that each of the constituent companies whkh formed the present complainant the Cleveland Electric Railway Companywas also authorized, for a period of time which has not yet expired, to charge a cash fare of five cents; that these different lineR have been merged by consolidation; and that, under the consolidation, the system is being operated as an entirety. The portion of the Euclid Avenue Line to which tbe reservation of the ordinance of 1879 had .reference, as an _independent line,. has long since ceased to be such, and the relations of the consolidated company (the complainant) and the city under these grants are so fixed as that to admit the reserved power of regulation. in the ordinaI!-ce of would be to impair the obligations of thesev1879 to be now eral subsequent contracts in which the rate of fare is definitely fixed without reservation. Also, as pointed out in the discussion of the question as to the other complainant, as a matter of practical railroad ope.ration, it iEl. difficult to see how the conferred rights of the parties could be worked out if effect is given to the alleged reserved power in the ordinance of 1879. '. It is contended by counsel for the city that certain of the provisions as to rates of fare, claimed .to constitute a new contract since the passage of the ordinance of 1879, are invalid, because in violation of section 2502 of the Revised Statutes, providing that, after a grant or renewal of a grant is made, the municipal corporation shall not, during the term of stich grant or renewal, release the gran-

408

94 FEDERAL ItltPORTER.

any:obl1gation 'or Hability imposed by the terms of such grant 'or 'reD:ewal. It is questiotli:!-blewhether therign.t :reserved to the city coun,qil t.o thereafter or diminiSh fare ,can faIrly be said to be eitb,er an '. obligation· or 'll liability Of the 'rarlroad comJlany within the meaning of this prohibition of the statutes; but, expressing no opinion on thatsubjec't; it is not true that the provisions of the section prohibit the city,'after making an agreement or grant or renewal of a. grant containing as to the rates of fare, from thereafter, upon 8u:(licient consideration, modifying such eontract. Thi!'\ has been expressly held in the case of Clement v. City of, Oincinnati,16 'Vkly. Law Bul. 355, and affirmed by the supreme eourt of the state in 19 Wkly. Law Bul. 74. The court there held:

"+he modification of a contrac.t l::tetw'een the city amI the owner of a streetrailroad route, made in good faith for the better accommodation of the public. is not void hy virtue of section 2502 of the Hevised Statutes, and the release of the grantee of such route from an obligation. although in consideration of more rapid transit, involving greater expense and higher rate of fare, is permitted."

See, also, Woodson v. Murdock, 22 Wall. 351; City of Cincinnati St. Ry. Cb.,:n Wldy. Law Bul. 308; Id., 2 Ohio X P. 298; also State v. East Cleveland R. Co., 6 Ohio Cir. Ct. R. 318, affirmed by supreme court in 27 Wkly. Law Bul. 64. For nearly 20 .rears, as the result of municipal legislation, sometimes hostile, sometimes friendly, the rights and privileges of the public and the different street-railroad companies of this city have been gradually molded into a well-defined code of ,street-railway laws, every step of which has been stubbornly contended for by the respective parties to these suits. Conceding to each pacty all the rights and privileges won ,by this agitation, the court is convinced, after a thorough and paiI:1Staking investigation of all the ordinances,grants, and evidence, that the complainants are entitled to the relief for which they pray in their bills of eomplaint, granting them a temporary injunction. The court thinks it must be clear to every fair-minded person, from the findings of fact filed with this opinion, that to permit the ordinances of October, 1898, to be put into. operation by the municipal authorities w0111d clearly impair tIre present contract- rights of the complainants, for which no adequate remedy' exists at law. The second contention: of the complainants is that the ordinances a rate so unreasonably low as to dein prive the complainants of their property without due. process of law. In support of this. contention, a large volume of testimony in the been filed by the defendant and the complainshape ants. On the part of the complainants these affidavits are offered to establish, their contenti(:m that, biking into consideration the value of their railway sys{elns, cost of construction, maintenance, and operation,. they could. not· carry passengers at the reduced rate proposedwitliout loss, and that this loss would be so great as that, in time, It W"oulddeprivethem of their property without due pl'ocess of law. The court has examined these affidavits sufficiently to see that it involve a laborious and expert accounting to decide this confention; and, having reached a conelusiGn on the first cOntention of the complainants, that the 'ordinanceS are invalid for the v.

·