U.S. Supreme Court
Detroit United Railway v. Michigan, 242 U.S. 238 (1916)
Detroit United Railway v. Michigan
Nos. 1, 4
Argued October 20, 1916
Decided December 11, 1916
242 U.S. 238
Plaintiff in error, in 1900, under the Michigan Street Railway law (Laws 1867, vol. 1, p. 46; Comp.Laws 1897, c. 168), acquired by purchase certain street railway lines in the City of Detroit, with their franchises, and, soon afterwards, certain suburban lines, with their franchises. The latter lines connected with the former at the city boundary, but lay wholly within adjacent village and township territory. The franchises for the city lines had arisen through ordinances of the city, among them ordinances passed in 1889, which placed special restrictions on fares, and were accepted by the then owners of the city properties. The franchises for the suburban lines had arisen through village and township ordinances which fixed the fares upon a basis more favorable to the respective grantees. Until all were acquired by the plaintiff in error, the city properties had been owned and held independently of the suburban properties. Plaintiff in error united the properties thus acquired under one organization. Thereafter, by acts of the legislature passed in 1905 and 1907, the limits of the city were so extended that portions of the two outlying railways were embraced therein. These acts chanroblesvirtualawlibrary
contained no reference to existing contracts nor specific mention of street railway rights, but each provided that the territory annexed should be subject to all the laws of the state applicable to the city and to all the ordinances and regulations of the city, with exceptions not here material. This litigation resulted from the contention of the city (which the state court sustained) that the outlying lines, insofar as they had come within the city through its extension, came also within the fare restrictions of the city ordinances of 1889.
(1) Upon consideration of the village and township grants and the law under which they were made (Act of 1867, §§ 13, 14 and 20), that the right to charge fare as therein permitted, upon the lines covered by those grants, was a valid right of contract whose obligation could not constitutionally be impaired by subsequent state legislation.
(2) That, conceding the validity of the Acts of 1905 and 1907 as annexation acts, yet an impairment of this contractual right, resulting from the effect given to them by the decision of the state court combined with the construction of the city ordinances as contractually binding the plaintiff in error to submit to their fare restrictions on all of its lines within the city as so extended, was an impairment attributable to the annexation acts as well as to the construction of the city ordinances.
(3) Therefore, whether the agreements imported by the ordinances of 1889, when properly construed, were operative in the added city territory was a question touching the merits of the case, and not the jurisdiction of this Court.
(4) That, read with the other city ordinances under which the franchises for the city lines were granted, the ordinances of 1889, in requiring one of the predecessors of plaintiff in error to carry passengers at reduced rates "over any of its lines in said city" and in requiring another to apply single fares and reduced rates "over the entire route of said company," were not intended to apply prospectively to lines which those companies might afterwards own within subsequent additions to the city.
(5) Even if such extended construction were allowable in respect of lines subsequently built under the actual or assumed authority of the ordinances of 1889, it could not be allowed in derogation of rights, privileges, and franchises -- especially as to fare -- arising independently under the township and village ordinances and acquired by plaintiff in error by purchase before the city was extended. Michigan Street Railway Act of 1867, § 15; Comp.Laws, 1897, § 6648, applied. chanroblesvirtualawlibrary
A grantee of a public grant may not be compelled to suffer the ills of a strict construction in one aspect without being accorded the benefits necessarily flowing from that construction in others.
Notwithstanding statements in Henderson Bridge Co. v. Henderson City, 141 U. S. 679, 141 U. S. 689; 173 U. S. 173 U.S. 592, 173 U. S. 602, it is settled that, when called upon to exercise jurisdiction under the contract clause, this Court must determine upon its independent judgment these questions: (1) was there a contract? (2) if so, what obligation arose from it? and (3) has that obligation been impaired by subsequent legislation?
162 Mich. 460, 173 Mich. 314, reversed.
The case is stated in the opinion. chanroblesvirtualawlibrary