Matter of Quinby v. . Public Service Comm.

119 N.E. 433, 223 N.Y. 244, 3 A.L.R. 685, 1918 N.Y. LEXIS 1177

• Court: New York Court of Appeals
• Decided: April 5, 1918
• Status: Published

Opinions

Pound, J.

The facts upon which the application for a writ of prohibition is based are as follows: The New York State Railways presented a petition to the public service commission of the second district praying that it be permitted to raise to six cents its rate of fare on street surface railways in the city of Rochester and a number of other cities. The city of Rochester filed objections to the jurisdiction of the public service commission to entertain such' application. Its objections were based, first, on chapter 359, Laws of 1915, amending the charter of the city of Rochester and fixing a five-cent rate for one ride over the road of any corporation operating a street surface railroad in such city, and secondly, upon the like terms and conditions contained in the franchise of the street railroad company as a condition of the consent of the local authorities thereto. Briefs were filed with the commission on behalf of the city of Rochester in support of its claim that the public service commission was without jurisdiction to entertain said petition of the New York State Railways, and oral argument was also made before the commission by the corporation counsel of the city.

In November, 1917, the public service commission made a decision in one of the cases (Matter of Petition of Huntington R. R. Co., 14 Official State Dept. Reports, 305; Matter of Application of N. Y. & N. S. Traction Co., 15 Official State Dept. Reports, 1, Jany. 10, 1918, contra) in which a petition for permission to in crease rate of fare was presented to it, and held that the commission had the power to permit fares to be increased to an amount beyond five cents, notwithstanding the provision of section 181 of the Railroad Law, and also that it had power to permit fares to be increased beyond the rate fixed in a franchise granted by a municipality to a street railway company, and beyond the rate fixed in a contract existing between a municipality and a street railway com pany. After such decision the public service commission decided to hear the Rochester case on the merits. The public service commission has thus assumed jurisdiction of the matter of the application of the New York State Railways for permission to increase its rate of fare in the city of Rochester to six cents.

In order to present the case before the public service commission it would be necessary for the city to have a valuation made of the property of the New York State Railways, and it would cost the city of Rochester not less than twenty-five thousand dollars to present its evidence before the commission.

A writ of prohibition will not lie in anticipation of the action of the commission if the commission has jurisdiction of the subject-matter and the only question is that of power to grant the particular relief prayed for. It is an extraordinary remedy for unusual cases. (People ex rel. Karr v. Seward, 7 Wend. 518; People ex rel. Bean v. Russell, 49 Barb. 351; People ex rel. Ballin v. Smith, 184 N. Y. 96; People ex rel. Patrick v. Fitzgerald, 73 App. Div. 339; People ex rel. Oakley v. Petty, 32 Hun, 443.) In Matter of Metz v. Maddox (189 N. Y. 460) the sole question before this court was the constitutionality of chapter 538, Laws of 1907, providing for a recount of ballots cast in the McClellan-Hearst mayoralty contest of the year 1905, and the suitability of the procedure was not passed upon. The point that prohibition is not the proper remedy here is raised only by the intervening public service commission of the first district and the real parties- are content to have this appeal disposed of on the merits.

We are, therefore, led to the inquiry: What is the jurisdiction of the commission over rate regulation? The New York State Railways operates in the second public service district, which comprises all counties except those in Greater New York. (Public Service Commissions Law [Cons. Laws, chap. 48], § 3.) It is a street railroad corporation within the meaning of that term as used in the Public Service Commissions Law (Public Service Commissions Law, § 2, subd. 7). The term “ common carrier’’ includes street railroad corporations. (Public Service Commissions Law, § 2, subd. 9.) Section 5 of the Public Service Commissions Law, after providing that the public service commission for the first district (Greater New York) shall have jurisdiction over common carriers operating within that district, provides as follows (Public Service Commissions Law, § 5, subd. 3) :

“ 3. All jurisdiction, supervision, powers and duties under this chapter not specifically granted to the public service commission of the first district shall be vested in, and be exercised by, the public service commission of the second district, including the regulation and control of all transportation of persons or property, and the instrumentalities connected with such transportation, on any railroad other than a street railroad from a point within either district to a point within the other district."

Section 181 of the Railroad Law (Cons. Laws, ch. 49), so far as material here, is as follows:

“ No corporation constructing and operating a railroad under the provisions of this article, or of chapter two hundred and fifty-two' of the laws of eighteen hundred and eighty-four, shall charge any passenger more than five cents for one continuous ride from any point on its road, or on any road, line or branch operated by it, or under its control, to any other point thereof, or any connecting branch thereof, within the limits of any incorporated city or village.

“ * * * The legislature expressly reserves the right to regulate and reduce the rate of fare on any railroad constructed and operated wholly or in part under such chapter or under the provisions of this article; and the public service commission shall possess the same power, to be exercised as prescribed in the public service commissions law.”

Subdivision 1 of section 49 of the Public Service Commissions Law is in part as follows:

“ § 49. Rates and service to be fixed by the commission. 1. Whenever either commission shall be of opinion, after a hearing had upon its own motion or upon a complaint, that the rates, fares or charges demanded, exacted, charged or collected by any common carrier, railroad corporation or street railroad corporation subject to its jurisdiction for the transportation of persons or property within the state, or that the regulations or practices of such common carrier, railroad corporation or street railroad corporation affecting such rates are unjust, unreasonable, unjustly discriminatory or unduly preferential, or in any wise in violation of any provision of law, or that the maximum rates, fares or charges, chargeable by any such common carrier, railroad or street railroad corporation are insufficient to yield reasonable compensation for the service rendered, and are unjust and unreasonable, the commission shall with due regard among other things to a reasonable average return upon the value of the property actually used in the public service and to the necessity of making reservation out of income for surplus and contingencies, determine the just and reasonable rates, fares and charges to be thereafter observed and in force as the maximum to be charged for the service to be performed, notwithstanding that a higher rate, fare or charge has been heretofore authorized by statute, and shall fix the same by order to be served upon all common carriers, railroad corporations or street railroad corporations by whom such rates, fares and charges are thereafter to be observed.”

It is clear that the New York State Railways, which operates in the city of Rochester and other cities of the state of New York outside the first district, is within the jurisdiction of the public service commission for the second district, and that such commission possesses some general jurisdiction to deal with the subject of regulating the rate of fare to be charged by the street railroads in the second district,

We must next consider whether this jurisdiction is limited,

1. By the charter amendment (L. 1915, ch. 359, § 7), ■fixing a five-cent fare in the city , of Rochester, which reads as follows:

“ A corporation operating a street surface railroad must not charge any passenger more than five cents for one continuous ride from any point on its road to any other point thereon, within the limits.of the city of Rochester. In case two corporations operate separate street surface railroads which connect or intersect in the city of Rochester, such corporations must not charge any passenger more than five cents for one continuous ride from any point on one road to any point on the other road, within the limits of the city of Rochester. In either of the above cases a transfer must be issued to a passenger when necessary for such passenger to transfer from one car to another, in order to complete one continuous ride. If two corporations affected by the provisions hereof cannot agree as to the method of division between them of-fares collected, such method of division must be settled by the public service commission of the second district of the state of New York. The word ‘ road ’ as used in this section includes all street surface railroads, lines and branches operated by one corporation, those leased by it and those under its control.”

The policy of the state is said to be that the public service commission should deal with the regulation of rates of fare charged by railroad corporations without limitation or restraint, and with the power to increase as well as decrease such rates. (People ex rel. N. Y. & N. S. Traction Co. v. Public Service Com., 175 App. Div. 869; People ex rel. Ulster & D. R. R. Co. v. Public Service Commission, 171 App. Div. 607, 611; affd., 218 N. Y. 643.)

The case last cited had to do exclusively with statutory, mileage book rates and it has not been held by this court that the commission has power to raise ordinary rates of fare.above the rate fixed by statute. The point was expressly saved for future consideration. “ We are now simply dealing with the question of reduced rates to which those words (‘ notwithstanding that a higher rate, fare or charge had been heretofore authorized by statute ’) clearly do not apply,” said Cochrane, J., in the U. & D. Case (supra) and his opinion was adopted by this court. But he also said that maximum statutory charges were to be considered and raised if insufficient, and the only reasonable construction of section 49, subdivision 1, is that when the maximum charges fixed by statute do not yield reasonable compensation for the service rendered the commission may raise the rate. The words “ notwithstanding that a higher rate, charge or fare has heretofore been authorized by statute ” are not entirely apt, but the section, read as a whole, is susceptible of no other natural interpretation than that the legislature has, for greater certainty, expressly included in its general .delegation of powers, the power of the commission to reduce a maximum rate fixed by the legislature. The purpose of the legislation was to provide for the regulation of statutory fares by a board which may be expected to pass equitably upon conflicting claims with its single purpose the common good, even where a maximum rate had been fixed by the legislature.

The case of Willis v. City of Rochester (219 N. Y. 427) merely upheld the charter amendment as a constitutional exercise of the legislative power to fix rates. Rates so fixed by special statute are still subject to regulation by the public service commission. The jurisdiction of that body over such rates is not to be reduced by implication. The legislature merely fixed the rate pro tempore.

We have still to consider whether jurisdiction is limited,

2. By the fact that the consent of the local authorities was given on condition as to rates of fare.

The Constitution, article III, section 18, as it was amended in the year 1875, provides:

“ But no law shall authorize the construction or operation of a street railroad except upon the condition that the consent of the owners of one-half in value of the property bounded on, and the consent also of the local authorities having the control of, that portion of a street or highway upon which it is proposed to construct or operate such railroad be first obtained, or in case the consent of such property owners cannot be obtained, the Appellate Division of the Supreme Court, in the department in which it is proposed to be constructed, may, upon application, appoint three commissioners who shall determine, after a hearing of all parties interested, whether such railroad ought to be constructed or operated, and their determination, confirmed by the court, may be taken in lieu of the consent of the property owners.”

The power of the local authorities to impose as a condition to giving consent to the construction and operation of a street railroad that a stipulated rate of fare should be charged has been repeatedly upheld. (People ex rel. West Side St. R. Co. v. Barnard, 110 N. Y. 548; Kittinger v. Buffalo Traction Co., 160 N. Y. 377, 391, 392; Public Service Commission v. Westchester St. R. R. Co., 206 N. Y. 209; People ex rel. Frontier Elec. Ry. Co. v. City of North Tonawanda, 70 Misc. Rep. 91; Allegheny City v. Millville, A. & S. S. Ry. Co., 159 Pa. St. 411.) But these cases dealt with the question of local power over the corporation and not with the question of general legislative power over the municipality. The question presented is this: The consent of the local authorities being obtained, what jurisdiction has the legislature conferred upon the public service commission to regulate rates by increasing' the rate agreed upon without such consent? Again it is urged that its jurisdiction is plenary; that “ a municipal corporation is simply a political subdivision of the State, and exists by virtue of the exercise of the power of the State through its legislative department. * * * The city is the creature of the State ” (City of Worcester v. Worcester Con. St. Ry. Co., 196 U. S. 539, 548); that rate regulation is a matter of the police ■ power of the state and, therefore, contracts may be affected by its exercise without impairing their obligation (Louisville & N. R. R. Co. v. Mottley, 219 U. S. 467, 485; Texas & N. O. R. R. Co. v. Miller, 221 U. S. 408, 414; Buffalo E. S. R. R. Co. v. Buffalo Street R. R. Co., 111 N. Y. 132); that the power to regulate rates has not been irrevocably surrendered to the local authorities by the constitutional requirement that the consent of such authorities is requisite; that no immunity from the exercise of governmental power has been transferred to the municipalities, save only that their naked consent is requisite; that if conditions may validly be imposed upon such consent by the localities in the beginning they are subject to alteration or repeal at the legislative will; that as the state cannot be fully sovereign without full legislative power, such power is not deemed to be abridged. (City of Rochester v. Rochester Ry. Co., 182 N. Y. 99; affd., 205 U. S. 236; Portland Ry., L. & P. Co. v. City of Portland, 201 Fed. Rep. 119, 125.) It has been held that the legislature may, by virtue of its general power over municipalities, regulate the mode and manner in which the consent of the local authorities to the construction and operation of street railroads shall be given, and may regulate and limit by statute the conditions upon which it may be given. (Matter of Thirty-fourth St. R. R. Co., 102 N. Y. 343; Beekman v. Third Ave. R. R. Co., 153 N. Y. 144, 152; People ex rel. S. S. Traction Co. v. Willcox, 196 N. Y. 212.) Regulations are so made in certain cases by the Railroad Law, section 173, but that section expressly provides that nothing therein contained shall be construed as modifying or affecting the terms of the contract between the city of Rochester and the street railroad, and it looks to the future and does not attempt to regulate consents already granted. The Constitution does not expressly provide that the municipality may irrevocably establish rates for the entire period of a franchise, and it has been held invariably and in a legion of cases that such power ‘to establish rates is not essential to the consent of local authorities and will not be implied and that the legislature is at all times supreme in the matter. (Home Telephone & Tel. Co. v. City of Los Angeles, 211 U. S. 265; Arlington Board of Survey v. Bay State St. Ry. Co., 224 Mass. 463; State ex rel. Webster v. Superior Court, 67 Wash. 37; L. R. A. 1915, C 287; State ex rel. M. S. R. R. Co. v. P. S. C., 168 S. W. Rep. 1156; City of Manitowoc v. M. & N. Traction Co., 145 Wis. 13; City of Dawson v. Dawson Tele. Co., 137 Ga. 62; City of Woodburn v. Pub. Service Commission, 82 Ore. 114; L. R. A. 1917, C 98; Collingswood Sewerage Co. v. Borough of Collingswood, 91 N. J. L. 20.) In all such cases, the question was one of unrestricted legislative power, policy and discretion over a- city or town where the local authorities were held to be mere instrumentalities through which the state exercised its sovereign power. The paramount power of the legislature over the subject of fares was upheld in the absence of a constitutional limitation. But our Con stitution, by requiring the consent of the local authorities, recognizes that our municipalities are pro lanío independent of legislative control, exercising some fragment of power, otherwise legislative in character, which has been thus irrevocably transferred by the fundamental law from the legislature to the locality. The grant by the municipality of authority to use the streets is not a mere privilege or gratuity. Once accepted, it becomes a contract which neither the state nor its agencies can impair. (People v. O’Brien, 111 N. Y. 1.) And it is urged by the appellant that the franchise and the conditions upon which the consent of the local authorities are obtained are inseparable; that the very right of the railroad to operate depends upon its compliance with the obligation to keep such conditions (Matter of N. Y. E. Lines Co. v. Empire City Subway Co., 201 N. Y. 321, 329; affd., 235 U. S. 179); that it would be a vain thing if the consent were placed under the protection of the Constitution, and the conditions which induced such consent were immediately subject to extinguishment by the legislature for that would mock the very purpose of the constitutional provision and permit almost any interference by the legislature; that the local authorities in this matter aré supreme over the public service commission by virtue of the Constitution; that the obligation of a street surface railroad to carry passengers for an agreed fare may in a constitutional sense be neither a contract nor private property, but it is imposed by virtue of a delegated power, delegated by the people — not by the legislature — to the local authorities, and is thus beyond legislative recall; that when any right is expressly protected by the Constitution the police power may not be exercised to impair its validity (People v. Gillson, 109 N. Y. 389, 400); and that the public service commission, therefore, has no jurisdiction over the subject-matter of rate regulations in the city of Rochester because the legislature has no power to alter the rates fixed by consent of the company and the local authorities.

It is, however, unnecessary and, therefore, improper to decide at this time what the limits of legislative power are in this connection. The delegation of legislative power to commissions and other administrative officers and boards need not be assumed if the general words ■from which such delegation may be inferred are not reasonably so construed.

In the absence of clear and definite language conferring without ambiguity jurisdiction upon the public service commission to increase rates of fare agreed upon by the street railroad and the local authorities we should not unnecessarily hold that the legislature has intended to delegate any of its powers in the matter, whatever its powers may be. The Public Service Commissions Law (§26, § 49, subd. 1) and the Railroad Law (§ 181) deal with maximum rates of fare established by statute but make no reference in terms to rates established by agreement with local authorities.

In regulating rates three courses were open to the legislature:

1. To prescribe rates itself. 2. To delegate the power to the commission. 3. To leave the matter to agreement between the street railroad company and the local authorities. It has constitutionally conferred on the public service commission certain functions (Matter of Trustees of Village of Saratoga Springs v. Saratoga Gas, E. L. & P. Co., 191 N. Y. 123), which plainly include the power to regulate rates fixed by statute, and while it may be said that it has undertaken to delegate to the public service commission “ the same power ” that it has to regulate rates of fare (Railroad Law, § 181) it is impossible to find a word in the statutes which discloses the legislative intent to deal with the matter of rates fixed by agreement with local authorities. As it has often been held in connections other than that of legislative power over them that such agreements are valid, it may well be inferred that the legislature excluded them from consideration by failure to mention them and that it has made no attempt to turn them over to the public service commission for revision. “ Statutes should be read according to the natural and most obvious import of the language, without resorting to artificial or forced constructions, for the purpose of either limiting or extending their operation.” (Matter of N. Y. & Brooklyn Bridge, 72 N. Y. 527, 529; Heerwagen v. Crosstown St. Ry. Co. of Buffalo, 179 N. Y. 99.) “ A thing which is within the letter of the statute is not within the statute, unless it be within the intention of the makers.” (Riggs v. Palmer, 115 N. Y. 506, 509; McDowall v. Sheehan, 129 N. Y. 200, 206.) The authority of the commission to regulate rates in such cases and thus to extinguish an undoubted power of the local authorities should fairly appear before it is assumed to exist.

It follows that the public service commission is without jurisdiction; that prohibition is the proper remedy; that the order appealed from should be reversed and that an absolute writ of prohibition be awarded to relators, with costs to appellants in all courts.