Portland Ry. Light & Power Co. v. Railroad Commission

Opinion by

Mr. Chief Justice Moore.

It- is maintained by plaintiff’s counsel that' the law in force when the order was confirmed did not authorize a regulation of fares in consequence of discrimination against any locality, but only when a difference in charges was made to passengers for like and contemporaneous service, and, such being the case, an error was committed in rendering the decree herein.

1. A statute was enacted February 18, 1907, creating a Railroad Commission, and containing provisions which, so far as deemed material, are as follows:

“The term ‘railroad’ as used herein shall mean and embrace all corporations * * that now, or may hereafter, own, operate by * * electric * * power, manage or control, any * * interurban railroad * * as»a common carrier in this State.” Laws 1907, p. 70, c. 53, § 11.

“Upon complaint of any * * municipal organization, that any of the * * fares, * * are in any respect unreasonable or unjustly discriminatory, * * the Commission may notify the railroad complained of that complaint has been made, and ten days after such notice has been given the Commission may proceed to investigate the same.

* * If upon such investigation the * * fares, * * complained of shall be found to be unreasonable or unjustly discriminatory, * * the Commission shall have power to fix and order substituted therefor such * * fares, * * as it shall have determined to be just and reasonable and which shall be charged, imposed and followed in the future.” Id. §28.

“Whenever, upon an investigation made under the provisions of this act, the Commission shall find any existing * * fares, * * are unreasonable or unjustly discriminatory, * * it shall determine and by order fix a reasonable * * fare * * to be imposed, observed, and followed in the future in lieu of that found to be unreasonable or unjustly discriminatory.” Id. § 30.

“It shall be unlawful for any railroad to demand, charge, collect or receive from any person, firm or corporation a less compensation for * * any service rendered or to be rendered by said railroad, in consideration of said person, firm or corporation furnishing any part of the facilities incident thereto.” Id. § 48.

“If any railroad shall make or give any undue or unreasonable preference or advantage to any particular person, firm, or corporation, or shall subject any particular person, firm, or corporation, * * „o any undue or unreasonable prejudice or disadvantage in any respect whatsoever, such railroad shall be .deemed guilty of unjust discrimination.” Id. § 49.

“The provisions of this'act shall be liberally construed with a view to the public welfare, efficient transportation facilities, and substantial justice between * * passengers and railroads.” Id. § 59.

“The duties and liabilities of the railroads defined in Section 11 of this act, shall be the same as are prescribed by the common law, and the remedies against them the’ same, except where otherwise provided by the constitution or statutes' of this State, and the provisions of this act are cumulative thereto.” Id. § 61.

After the decree herein was rendered a statute was enacted making the provisions of the railroad commission law applicable to any locality. Laws 1909, p. 158, c. 97. It might seem that the latter law was a legislative interpretation that the original-act did not interdict the collection of fares that were unreasonable or unjustly discriminatory as to a locality. “The enactments of any specific provisions on a particular subject,” says a text-writer, “are not to be regarded as conclusive declarations that the law was different before.” End. Int. Stat. § 374. At common law, as the carrier deals with individuals, they alone can prefer charges for a wrongful discrimination. Beale and Wyman" R. R. Rate Reg. § 831. These authors, at the section noted, say: “Except under a statute, a city or locality or the citizens in general cannot complain of the rates charged by a carrier.”

The rules which derive their authority from the judgments and decrees of courts, recognizing and enforcing the usages and customs of immemorial antiquity, having by Section 61 of the railroad commission act, been made expressly applicable to the regulation of railroads of Oregon. Do the principles of the common law afford a remedy for the correction of charges made by a common carrier, where they are in any respect unjustly discriminatory as to a locality, when the original law under consideration (Section 28) authorizes a complaint thereof to be made by a municipal organization? The doctrine has been asserted that by the ancient law a carrier of chattels for any person, though he was obliged to transport, for a reasonable consideration, all proper goods in the order in which they were received, and that when the charge exacted therefor did not exceed the measure indicated, he could legally transport similar goods for others over the same line and distance for a less sum, which discrimination was held not to be unjust, because the less favored shipper, who was obliged to pay the higher freight charges, had only liquidated the legal demand. 17 Am. & Eng. Enc. Law (2 ed.) 135; Story, Bail. § 508a; Wood’sRy. Law, § 197. It was. subsequently ascertained that the application of such a principle permitted the patronized consignors to undersell their business rivals to the extent of the discrimination in freight rates, thereby destroying the competition of others, and building up monopolies for- themselves, to prevent which laws were enacted, evidencing a growing popular sentiment against the doctrine first promulgated. In the absence of such legislation, however, the courts of last resort, when not committed by an opinion to the contrary have held that the carrier’s charges should not only be reasonable, but should also be equal as to all persons who might be affected thereby. Beale and Wyman, R. R. Rate Reg. § 741; Messenger v. Pennsylvania R. R. Co., 36 N. J. Law, 407 (13 Am. Rep. 457); Id., 37 N. J. Law, 531 (18 Am. Rep. 754). A text-writer, referring to this principle, observes:

“The English courts have said that at common law common carriers were bound to make reasonable, but not equal, charges, and that one of whom a fair compensation was exacted had no cause of complaint because another obtained a similar service for less. It is doubtful if this, really was the common law of England; certainly it, never was that of the United States. It is the settled American doctrine that, as common carriers exercise a public employment, they owe equal duties to all, and must make no unjust or injurious discrimination between different individuals in their rates of toll.” Bald. Am. R. R. Law, c. 35, § 1.

2. Chapter 53 of the Laws of 1907 was enacted to prevent discrimination; and, in order to make the statute effective, the act expressly declares that its provisions shall be liberally construed, with a view to the public welfare and the promotion of substantial justice between passengers and railroads. The axiom, “whoever grants a thing is deemed also to grant that without which the grant itself would be of no effect,” though generally applied to the transfer of real property, is also adapted to the construction of acts of the legislature. Broom, Legal Max. (7th Eng. ed.) 359; End. Stat. Const. § 418. As the original statute enlarged the common law right by permitting a municipal organization to make complaint of unjust discrimination, the act imports that the accusation sanctioned may be invoked to call attention to favoritism as against a locality over which the officers of the municipality have control, and the language so employed necessarily implies that the Railroad Commission, though not in explicit terms, is, by reasonable intendment, directed to hear and determine the charges, and empowered to grant the requisite relief. Giving to the original act the enlarged interpretation which is expressly demanded, we conclude that the statute of 1909 (chapter 97), making the railroad commission law applicable to a locality, was adopted out of an abundance of caution, and to remove all doubt in relation thereto, but that the amendment was a matter of supererogation, for plenary power to correct discrimination as to localities was impliedly granted by the original act, and hence the orders undertaken to be set aside are not void for want of jurisdiction.

3. It is contended that the five-cent fare on the Mt. Scott division from Lents and intermediate stations to and through the city of Portland was established pursuant to a valid contract entered into by plaintiff’s predecessor for a valuable consideration six years prior to the passage of the railroad commission law, that by virtue of such agreement the plaintiff secured a vested right of which it cannot be deprived, and that the attempt to do so, as manifested by section 48 of the railroad commission act, is an effort on the part of the legislative assembly to violate the obligation of a contract. The organic law of the State, in force when the Lents contract was executed, contained a clause as follows: “Corporations may be formed under general laws, but shall not be created by special laws, except for municipal purposes. All laws passed pursuant to this section may be altered, amended, or repealed, but not so as to impair or destroy any vested corporate rights.” Section 2, Article XI, Constitution of Oregon.

4. Another provision of the fundamental law is invoked, to-wit: “No * * law impairing the obligations of contracts, shall ever be passed.” Id. Article I, Section 21.

5. In Ex parte Koehler (C. C.) 23 Fed. 529, in construing the foregoing clause, interdicting the deterioration or extinction of any established privilege of a corporation, it was held that a railway company formed under the general corporation act of Oregon had a vested right to collect and receive a reasonable compensation for the transportation of persons and property over its road, which the legislature could not impair or destroy. The reasonable compensation thus guaranteed to a common carrier is a standard which necessarily fluctuates, so that a rate which would, when adopted, have been deemed justifiable, may not thereafter be so regarded, owing to the increased traffic and the improved facilities whereby the cost of transportation is lessened. The authority of a railroad company to collect reasonable fares and charges., though a vested right, is, like all other interests, subject to the police power of the State, which may be exercised to promote the public welfare, and to establish between the common carrier and the passenger or the shipper, rules calculated to prevent conflict of rights and to insure to each the uninterrupted enjoyment of his own, so far as reasonably consistent with a like enjoyment of rights by others. Cool. Const. Lim. (6 ed.) 704. Thus in Bullard v. Northern Pac. R. R. Company, 10 Mont. 168 (25 Pac. 120: 11 L. R. A. 246), it was held that under the provisions of the interstate commerce law (Act Cong. Feb. 4, 1887, c. 104, 24 Stat. 379 [U. S. Comp. St. 1901, p. 3154]) a contract, made prior to the passage thereof, for the transportation of freight at a rate and on terms violative of that law, could not be enforced against the carrier to recover rebates due upon goods carried after such act went into effect.

6. A grant by the legislative assembly to a corporation of authority to employ the right of eminent domain necessarily implies a reservation of the police power to regulate and prescribe the measure of compensation which is determined to be reasonable, and which may be collected for transportation of passengers and freight; and, if a common carrier could, by a contract stipulating the continuance of a specified rate of fares and freight for a given time, prevent any interference with such agreement, by invoking the clauses of the organic act relied upon herein, it would thereby become superior to the legislature, which doctrine will never be acknowledged by courts. The police power, being necessary to the preservation of the rights of the citizen and to the maintenance of the autonomy and the authority of the State, cannot be bargained away in any manner whatever. Cool. Const. Lim. (6 ed.) 340.

7. A contract of the kind supposed will be assumed to be valid until abrogated by the sovereign which prescribes different rates.

It is doubtful if the question here adverted to is involved, for neither the order of the Eailroad Commissioners, nor the decree confirming it, attempts to change in any manner the terms of the agreement relating to the transportation of passengers from Lents over the Mt. Scott division to or through the city of Portland. The contract rate of 5 cents, however, was taken as the basis of a reasonable compensation by which to measure the fare to be charged on the Oregon City division for an equal distance, and for conceding the same transfer privileges that are granted on the Mt. Scott division. The terms of the Lents contract probably prevent the plaintiff from charging as great a rate of fare on that division as is now collected on other lines operated by it outside the city limits, and the only way in which it can escape a violation of the provisions of Section 48 of the railroad commission law is by reducing the charges on such other lines to the same proportion as is received on the Mt. Scott division. In this particular only can it be said that the obligation of a contract is in any way affected by this act of the legislature. No vested corporate rights have been diminished or destroyed thereby.

8. It is insisted that the cost of constructing the Mt. Scott division was 50 per cent less per mile than that of the Oregon City division, that the number of passengers on the latter line, north of Milwaukie, is less than one-twentieth of those over the Mt. Scott division, and that the service performed is so dissimilar, and rendered under such diverse circumstances and conditions, as to make the difference in fares between Lents and Portland and between that city and Milwaukie not unjustly discriminatory against the latter town. In the vicinity of the Mt. Scott division is a district between the city boundary and the town of Lents which contains many people, and, based on this fact, it is argued that the Lents contract, in effect, makes such territory a part of Portland, and extends to the inhabitants of that locality the 5-cent fare, that, considering the question of unjust discrimination, the comparison of fares must be a relative estimate of the respective distances from the city boundary, and that for all practical purposes the remoteness from the Portland terminal should be computed as if all such district were within the corporate limits of that city. The 5-cent rate of transportation for a continuous trip in one direction between any two points extends by compulsion to the boundary of Portland (Section 2096, B. & C. Comp.), where the second district of rates begins, unless the first division is voluntarily continued beyond that circuit. As fares outside that city on suburban lines of railway now consist of multiples of 5 cents, all 10-cent rates would be expected to begin at the point of intersection of the line of the road and the city boundary, from which place the extent of the second district should be computed. By making the limits of the municipality the beginning of all 10-cent fares no discrimination against any locality can exist, except such as the peculiar form of the boundary may sanction; and the several districts, coinciding with the respective multiples of 5 cents, ought to be parallel with the exterior boundaries, if the railway lines were built at right angles thereto. The density of the population along the Mt. Scott division, between the city limits and the town of Lents, does not make that territory a part of Portland, nor can the Lents contract, in effect, incorporate such district within that city.

Section 48 of the Railroad Commission law makes it an offense for any railroad company to collect for carrying one person more than it demands from another “for a like and contemporaneous service.” Though the clause of our statute from which the last-quoted excerpt is taken does not contain the expression “under substantially similar circumstances and conditions,” as is found in Section 2 of the interstate commerce law, it is asserted by counsel for plaintiff that such phrase is reasonably implied in our enactment in construing which it should be held that there can be no “like service,” unless it is for carriage over the same line, and hence any difference in charges for transporting persons over another branch of the plaintiff’s road is not prohibited or unjustly discriminatory. The legislative assembly of this State, in framing Section 48 of the Railroad Commission law, patterned it somewhat after Section 2 of the interstate commerce law, and it would seem that the phrase “under substantially similar circumstances and conditions” had been purposely omitted from our enactment. This act of Congress was designed to correct unjust discriminations in charges for the transportation of passengers and freight from one state or territory to another, while our law is applicable only within the State of Oregon. The great transcontinental railways of our country necessarily cross the Rocky Mountains, from the summit of which freight can be hauled in cars down grade to the Pacific Coast or to the Atlantic Ocean much cheaper than goods can be transported from points on the respective • seaboards to the utmost height of such mountains. The general movement of freight on such lines of railway may only be in one direction, and loaded cars which were hauled to their destinations would be returned empty unless goods for transportation could be obtained, to secure which less charges are frequently made than the cost of the service will warrant. So, too, at some seasons of the year shipments of freight may change their course, and the charges for transportation must be altered to meet the varying conditions and to avoid the necessity of returning cars empty. These facts were undoubtedly considered in framing Section 2 of the interstate commerce law, and induced the insertion therein of the phrases “a like and contemporaneous service,” and “under substantially similar circumstances and conditions,” the latter of which seems purposely to have been omitted from our law on the subject. The absence of such clause from our statute leads to the conclusion that the phrase “a like and contemporaneous service,” as employed therein, is not limited to transportation over the same line, but extends to service rendered on other lines operated by the same railway company, and particularly so when electric cars are used on urban, suburban, or interurban railroads. The cost of constructing and maintaining a portion of a railway, and the volume of business on one part of the line when compared with another, may make the operation of one section much more remunerative than another, but the net revenue upon which dividends are declared is not based on particular divisions of the road, but upon the entire system.

9. Quite an array of figures are set forth in the brief of plaintiff’s counsel, and facts are stated therein in support of the contention that the rate of transportation and the privileges prescribed in the order and decree complained of will not furnish a reasonable return upon the capital invested, and that the maintenance of the existing fares is necessary to supply such recompense, that neither the defendant nor the court can speculate as to the probable effect upon the plaintiff’s. business or upon the consequences of any change in the population or in the value of property in the affected district, and that, if any reduction is proper, an arbitrary diminution of 50 per cent as to Milwaukie is excessive, unjust, and unreasonable. We do not thing it necessary to discuss either of these questions; for the plaintiff, having agreed to accept a fare of 5 cents for carrying passengers between Portland and Lents, thereby asserted the value of the employment so rendered, by which measure it must be governed for similar service on the Oregon City division an equal distance beyond the boundaries of the city of Portland. As illustrating this principle, it is said in Menacho v. Ward, (C. C.) 27 Fed. 529, 532:

“The estimate placed by a party upon the value of his own services of [or] property is always sufficient, against him, to establish the real value; but it has augmented probative force, and is almost conclusive against him, when he has adopted it in a long-continued and extensive course of business dealings, and held it out as a fixed and notorious standard for the information of the public.”

It will be remembered that the rate to Lents was established pursuant to the terms of an agreement, but it appears that the plaintiff voluntarily made a 5-cent fare on the Springwater division from Portland to Nickum, which latter place is .56 mile outside the city limits, and thereby manifested a preference for Nickum as against Milwaukie, which is 1.35 miles outside such boundary. The reason assigned in the brief of plaintiff’s counsel for such discrimination is that where the Springwater division crosses the city limits, the roadbed consists of, a high fill that extends east quite a distance to a deep cut, which latter continues beyond Nickum; that at the boundary no public highway exists by which passengers can approach the railroad; that the nearest place where the railway can be reached without trespassing on private land is at Nickum; and that in consequence of such obstacles the cars cannot be stopped at the city limits. A passenger would be entitled to ride on this division from Portland to the city boundary for a 5-cent fare; and, if he refused to pay a greater sum for further transportation, he could be ejected from the cars at that place. Whether or not he could leave the track without going up or down it to some station where a public highway could be found is a question that affects the plaintiff only to the extent that the absence -of such road or street might have a tendency to diminish travel, to overcome which and to promote the interests of the railway company, passengers are carried to Nickum. This, in our opinion, under the present statute, amounts to a discrimination. The 10-cent fare between Portland and Milwaukie is not unreasonable when compared with the charges made by other railway companies for similar service, but the Railroad Commission law authorizes an investigation upon a complaint as to a charge which is in any respect “unreasonable or unjustly discriminatory.” Section 28. It is not necessary, therefore, that the rate charged should be unreasonable, for if it is unjustly discriminatory, it is sufficient to authorize a regulation thereof. An examination of the evidence fully justifies the finding, made by the trial court in confirming the order of the Railroad Commission, that the rate from Portland to Lents and from such city to Nickum, and the transfer privilege granted to passengers on the Mt. Scott and the Springwater divisions, are unjustly discriminatory as against Milwaukie.

It follows from these considerations that the decree herein should be affirmed, and it is so ordered.

Affirmed.