West Rutland v. Rutland Ry. L. P. Co. , 98 Vt. 508 ( 1925 )

This is a petition for writ of mandamus to compel the respondent to comply with an order of the Public Service Commission made by virtue of the jurisdiction referred to in Townof West Rutland v. Rutland Ry. L. P. Co., 96 Vt. 413, 121 A. 755. The validity of the order is not disputed; nor is it denied that the enforcement of such orders is left to this Court by No. 92, Acts of 1923. That the defendant has disobeyed the order by failing to comply with it is conceded. Ordinarily, when properly applied for, a mandate to enforce such an order would issue almost as a matter of course, but the statute under which we are called upon to act expressly declares that we shall "make such orders and decrees * * * by way of writ of mandamus, writ of prohibition, injunction, or otherwise, * * * as to law and equity shall appertain." Section 3. The defendant insists that the circumstances here are such that it would be both unlawful and inequitable to enforce this order.

The defendant answered the petition, and evidence has been taken pursuant to an order for that purpose.

The material facts relied upon in defense briefly stated, are as follows: The defendant's business is conducted in three departments: gas, electricity, and railroad; the accounts of these departments are separately kept; its railroad operations have been progressively unprofitable until the time has come when it has no means derived from that department with which to do the work required by the order in question, which work will cost upwards of $12,000; in this situation, the defendant has discontinued the operation of its road on the streets covered by the order, and thence on to the village of Fair Haven. The other departments of the defendant's business are profitable — so much so that the 5 per cent. interest on its bonds of about $2,000,000 has been paid, and the 7 per cent. dividend on its preferred stock of over $100,000 has been regularly paid; the last payment having been made on July 1, 1924, which was since these enforcement proceedings were begun.

By the original charter of the Rutland Street Railway Company, No. 181, Acts 1882, § 7, that company was required to "keep the portion of the highway between its tracks, and for a distance of two feet on each side thereof, in as good condition for travel in all respects as the adjacent highway." It is to enforce this provision that the order in question was made.

The duties and obligations which the defendant company assumed with respect to the Railroad Company by its charter were co-extensive with the duties and obligations resting upon that Company prior to consolidation; for the terms of the new charter are "it [defendant] shall be liable for all debts and obligations of said several constituent companies." No. 303, Acts of 1908, § 3. Thus the obligation of the original charter above quoted became a charter obligation of the consolidated company. The duties and obligations so imposed, being charter duties and obligations, rested upon the new corporation as a whole. They attached as a condition to the grant of its rights under that charter, and its obligations thereunder are continuous during the life of the grant and cannot be abrogated without the consent of the granting power. City of Burlington v. BurlingtonTraction Co., 98 Vt. 24, 124 A. 857. They must be discharged by the use of any funds of the defendant, regardless of their source, though such use results to the defendant's financial disadvantage.

It is uniformly held that an acceptance of the franchise requires a compliance with all its terms although the carrying out of such obligations may eventually result in serious financial loss to the grantee of the rights.

"It is true," says Mr. Justice Holmes in Brooks-Scanlon Co. v.Railroad Commission, 251 U.S. 396, 64 L. ed. 323, 40 Sup. Ct. 183, "that, if a railroad continues to exercise the power conferred upon it by a charter from a state, the state may require it to fulfil an obligation imposed by the charter, even though fulfilment in that particular may cause loss."

If a railroad company agrees to do certain things in consideration of the rights given to construct its lines, it must perform as stipulated or suffer the consequences of its failure to do so. Norristown v. Reading Tr. Lt. Co., 277 Pa. 459, 121 A. 495; Alleghany v. Millville E. S. St. Ry. Co., 159 Pa. 411, 28 A. 202; Swarthmore v. Philadelphia Rapid Transit Co.,280 Pa. 79, 124 A. 343, 33 A.L.R. 128.

The defendant relies upon the oft-recognized doctrine that when a corporation is required by any act or proceeding to devote to the public use its property without compensation it is thereby deprived of it without due process of law; and it insists that when a public utility corporation is engaged in furnishing the public through various departments of its business different kinds of services, it cannot be compelled to carry on any branch of its business at a loss, even though at the same time its whole business be conducted at a profit. But this doctrine is inapplicable here, for this is not a proceeding to require the railroad company to continue services at the expense of its other departments, but rather to require it to perform its charter obligations. This corporation cannot escape such obligations, while it continues to act under its grant, on the ground that the expense will reduce its income below a fair rate. Missouri Pac., etc., R.R.Co. v. Kansas, 216 U.S. 262, 276, 54 L. ed. 472, 30 Sup. Ct. 330;Milwaukee Electric R.R. Co. v. Milwaukee, 252 U.S. 101, 64 L. ed. 476, 40 Sup. Ct. 306, 10 A.L.R. 892; Georgia Ry. P. Co. v.Decatur, 262 U.S. 432; 67 L. ed. 1065, 43 Sup. Ct. 613; SouthernIowa Electric Co. v. Chariton, 255 U.S. 539, 65 L. ed. 764, 44 Sup. Ct. 400; Paducah v. Paducah Ry. Co., 261 U.S. 267, 67 L. ed. 647, 43 Sup. Ct. 335; Railroad Com. of Texas v. Eastern TexasR.R. Co., 264 U.S. 79, 68 L. ed. 569, 44 Sup. Ct. 247.

The rule established by the cases cited is that by accepting a charter, the grantee consents to be bound by all of its provisions and conditions, and the corporation cannot complain of the enforcement of any of them. To the enforcement of these, the question of taking the property of the corporation without compensation does not apply. If this were not so, a corporate charter, as was said in Missouri P., etc., R.R. Co. v. Kansas,supra, would be "* * * purely unilateral, that is * * * binding in favor of the corporation as to all rights conferred upon it, and * * * devoid of obligation as to duties imposed * * *."

Since the time the order was made a radical change has taken place in the conditions which then existed, in that, while the income for the first seven months of 1923 was $10,892.77, the result of operation for the first six months of 1924 shows a deficit of $3,320.15. Its entire railroad is in bad physical condition for want of means to keep it in repair and operate with safety; and it has become apparent that all of its lines, in view of the great increase of other facilities for transportation, cannot be operated at a profit; on June 30, 1924, the respondent gave notice that on July 7, 1924, the operation of its railroad over said streets would be discontinued, and subsequently ceased its operation thereon as above stated.

If it may lawfully do this, as to which we here express no opinion, it can avail the defendant nothing, for it would not absolve it from its charter obligation to put the highway in the condition in which it was required by its charter to be kept. It had the benefit of its charter rights and must answer for its omission of corresponding charter obligations. It became the primary duty of the respondent to proceed at once with the performance of the order in question. That the financial condition as a result of further operation of the railway department was unanticipated and disappointing does not affect the validity of the order. When the order became final it was the duty of the company to begin performance. But it appears that the defendant applied to the Public Service Commission to be relieved from the order in question by reason of its financial condition, and to be allowed to discontinue the operation of its railroad upon the streets in question and as far as Fair Haven. This application was denied by the Commission for want of jurisdiction. The question here made was considered in disposing of the defendant's appeal therefrom.Rutland Ry. Lt. Pr. Co. v. Town of West Rutland, 98 Vt. 385,127 A. 882.

Let a writ of mandamus issue commanding the defendants toperform, without delay, the order of the Public ServiceCommission here in question. Let the petitioner recover itscosts.

NOTE: — Before issuing mandate but after filing thereof, it appearing that the matters involved therein, had been adjusted by the parties, no mandate issued.