Railroad Commission v. Los Angeles Ry. Corp., 280 U.S. 145 (1929)

MR. JUSTICE STONE, dissenting.

I agree with MR. JUSTICE BRANDEIS that this case should have been disposed of by remanding it to the district court of three judges for determination whether the railway company, under its 102 franchises, or any of them, is bound by contract to maintain a five-cent fare. That question is, I think, different from the one presented in Home Telephone Co. v. Los Angeles, 211 U.S. 265, and involved in Detroit v. Detroit Citizens’ Railway Co., 184 U.S. 368, and Vicksburg v. Vicksburg Water Works Co., 206 U.S. 496, whether the city had the requisite legislative authority to bind itself not to reduce the rate of fare fixed by the franchise. Here, concededly, the power to regulate rates is reserved to the state commission, and the question preliminary to the whole case is whether the railroad company has bound itself to serve for a five-cent fare. I know of no principle of the law of contracts, qua contracts, which would preclude its doing so, even though the city had no power to obligate itself to maintain any particular rate. It has not purported to exercise such power by so contracting. It had power to grant franchises, and the grant of the franchise, without more, would be good consideration for the company’s undertaking to maintain a five-cent fare. Williston on Contracts, §§ 13, 140.

The provision of the statute of April 7, 1913, enacted after the decision in Home Telephone Co. v. Los Angeles, supra, authorizing the city to grant franchises and "to prescribe the terms and conditions" of the grant, and that of the act of June 8, 1915, authorizing the grantor of the franchise to impose terms and conditions "whether governmental or contractual in character," to quote no others, would seem to permit the city to acquire, by the mere grant of the franchise, without other obligation on its part, such contractual undertakings on the part of the railroad company as did not contravene the public interest.

If there be any public policy forbidding the company so to bind itself or forbidding the city to take advantage of the undertaking so given and acquired, it is one peculiar to local law, having its origin in local history and conditions, and so is peculiarly an appropriate subject for consideration, in the first instance, by the court of the district.

But as the Court, without dealing with this aspect of the matter, has held that the railway company is not so bound, it is unnecessary to decide that the state Railroad Commission’s refusal to raise the rate would have been enough to abrogate the contract, if there had been one, and the practice of the Court not to pass on questions of constitutional or state law not necessary to a decision should, I think, be scrupulously observed. Even if necessary to decide the question, I would not be prepared to say that the refusal of the Commission to fix a fare different from the contract rate would destroy the contract. By contracting for a five-cent fare, the railway company waived the protection of the due process clause of the Fourteenth Amendment. Columbus Ry. Co. v. Columbus, 249 U.S. 399; Southern Iowa Electric Co. v. Chariton, 255 U.S. 539, 542; Paducah v. Paducah Ry. Co., 261 U.S. 267, 272; Georgia Ry. Co. v. Decatur, 262 U.S. 432, 438; Henderson Water Co. v. Corporation Commission, 269 U.S. 278, 281. Granting that the contract was subject to the power and duty of the Commission to modify it by changing the rate, that power has not been exercised, and the duty is one arising, not under the Constitution and laws of the United States, but is imposed by state statute, for breach of which a state remedy alone should be given. See Henderson Water Co. v. Corporation Commission, supra, p. p. 282 (compare Corporation Commission v. Henderson Water Co., 190 N.C. 70).