Petitioners Brief — Georgia Power Co. v. Decatur

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Supreme Court of the United States

OCTOBER TERM, 1929

No. 363

GEORGIA POWER COMPANY

Petitioner

vs.

CITY OF DECATUR

Respondent

BRIEF OF

GEORGIA POWER COMPANY

lL’ WALTER T. COLQUITT,

_ BEN J. CONYERS,

Attorneys for Georgia Power Company.

— ——— — — —p ' ——

E — — — —

INDEX

List of cases cited in brief

Statement of case

Evidence in case undisputed.

Decree of trial court

Decision of the Supreme Court of the State of Georgia

Federal question involved

Former litigation -.......--.------

Question before this Court for its determination

Assignments of error Sos

Municipal franchise under which the line in question was

constructed and being operated has expired and been

terminated 9

Discussion of Municipal Rate contract of April Ist, 1903. 13

Principle of law announced by this Court in construing

Municipal contract 21

Discussion of cases cited by Supreme Court of State of

Georgia 24

coanannre

LIST OF CASES CITED IN BRIEF

Barney vs. Indiana Ry. Co. et al., 61 N. E. 194 (note b). 2

Blair vs. Chicago, 201 U. S. 400— 6, 11, 13, 14, 18, 2

Brooks-Scanlon Co. vs. Railroad Commission of La., 251

U. S. 396 16, 28, 25

Borough of Bellevue vs. Ohio Valley Water Co., 91 Atl.

Rep. 236 (note b) 2

Central R. &. B. Company vs. State of Georgia, 54 Ga.

404, 420, 422 10

Charleston-Isle of Palms Traction Co. vs. Shealey, 266

Fed. Rep. 406 16,17

Chattanooga R. & C. R. Co. vs. Cincinnati, N. O. & T. P.

Ry. Co., 44 Fed. 465 (3) 2

City and County of Denver vs. N. Y. Trust Co., 229 C. S.

123, 142 ll

Cleveland Elec. R. Co. vs. Cleveland, 204 U. S8.

116. 6, 8, 18, 14, 16, 18, 20,25

Columbus Railway, Power & Lt. Co. vs. Columbus, 249

U. S. 399, 406, 407 6,2

Crawford vs. Crawford, 189 Ga. 394 (4), 396, 399 —— ll

Denver vs. Denver Union Water Co., 246 U. S. 178 12, 15

Detroit U. R. Co. vs. Detroit, 229 U. S.

6, 11, 18, 14, 16, 18,20

Detroit vs. Detroit City R. Co., 134 U. S. 868 (note a)

Elliott on Contracts, Section 1871 (note b)

Erie Railroad Co. vs. Board of Pub. Utility Commission-

ers, 254 U. S. 394, 411

Fort Smith Lt. & Traction Co. vs. Fargan Bourland, 267

U. S. 300

III

Freeport vs. Freeport Water Co., 180 U. S. 578, 600

(note a)

Georgia Code Section 2215

Georgia Code Section 2662

Georgia Railway & Power Co. vs. Railroad Commission of

Georgia, 149 Ga. 1

Railway & Power Company vs. Town of Decatur,

152 Ga. 143 3

Georgia Railway & Power Company vs. City of Decatur,

262 U. S. 433

Gilschrist vs. Waycross St. & Suburban Ry. Co., 246 Fed.

Rep. 952

Home Tel. & Tel. Co. vs. City of Los Angeles, 211 U. S.

265

(Kenny vs. Knight, 119 Fed. R. 475 [2])

Knoxville Water Co. vs. Knoxville, 189 U. S. 434 (note a)

Jones vs. Newport News, 65 Fed. 736, 841 (2 19, 22

Joliet Bottling Co. vs. Joliet Citizens Brewing Co., 98 N.

E. 268 (note b)

Michigan Mutual Life Ins. Co. vs. Thompson, 266 Fed.

978 (3)

Munn vs. Illinois, 94 U. S. 113, 192

McCullough-Dalzell Crucible Co. vs. Philadelphia Co., 72

Atl. Rep. 633

Omaha Electric Light & P. Co. vs. City of Omaha, 179

Fed. 455 (3), 460.

Railroad Commission of California and City of Los An-

geles vs. Los Angeles Ry. Corp., rendered Dec. 2, 1929.

Railroad Commission of Ga. vs. Macon Ry. & Lt. Co., 151

Ga. 256

Railroad Commission of Texas vs. Eastern Texas Rd. Co.,

264 U. S. 79, 86 ~

Rockwith vs. St. Road Bridge Co., 108 N. W. 785.

Risley vs. City of Utica, 179 Fed. 885. 12

San Antonio Street Ry. Co. vs. State of Texas, 35 L. R.

A. 662, 30 S. W. 926 1

Southern Bell Tel. & Tel. Co. vs. Railroad Commission of

South Carolina, 280 Fed. 901, 902 (7) 17

Stanley vs. Stembridge, 140 Ga. 750 (5), 754, 757 11

State of Iowa vs. Old Colony Trust Co., 215 Fed. 307, 313 16

State of Montana & Knight vs. Power Co., 44 L. R. A.

692, 22 Montana 391, 65 Pac. 685 17

State of Texas vs. Eastern Texas R. Co., 264 U. S. 123,

— —ẽ—̃—¼4 19, 28

Stiles vs. Citizens Elec. Co., 19 L. R. A. (N. S.) 865; 199

Mass. 294; 85 N. E. 419 17

Sutton vs. Hiram Lodge, 83 Ga. 770 11

Southern Iowa Electric Co. vs. City of Chariton, 255 U. S.

359 (note a) 21

Texas & P. R. Co. vs. Marshall, 136 U. S. 393....19, 21, 22, 28, 26

Texas & P. R. Co. vs. Scott, 77 Fed. 726 (2), 730 19

Turnpike Co. vs. Illinois, 96 U. S. 63 ll

Turtle Creek Borough vs. Penn. Water Co., 99 Atl. 199

(note b) 22

United States Judicial Code Sec. 344 (b). 6

Virginia Cannon Toll Rd. Co. vs. People, 22 Col. 429; 37

L. R. A. 711, 718, 719 ll

West End & Atlanta St. Rd. Co. vs. Atlanta St. Rd. Co.,

49 Ga. 151 (1) 10

Western U. Tel. Co. vs. Fain & Parrott, 52 Ga. 19, 22 12

Wyandotte Elec. Lt. Co. vs. Wyandotte, 124 Mich. 48; 82

. an ere a ll

GEORGIA POWER COMPANY,

Petitioner No. 363

vs. Supreme Court

f the

CITY OF DECATUR, tes

Respondent. United States

BRIEF OF GEORGIA POWER COMPANY

STATEMENT OF CASE

The City of Decatur (a Municipal corporation of the State of

Georgia) brought its equitable petition against the Georgia

Railway & Power Company and the Georgia Railway & Elec-

tric Company (subsequently consolidated into the Georgia

Power Company) to enjoin the street railway companies from

ceasing to operate its line (known as Atlanta Rapid Transit

Line or the North Decatur Line) within the corporate limits of

Decatur. Said suit sought to compel continued, perpetual and

never ending street railway operation within said Municipality ;

founding it exclusively upon a certain Municipal rate contract

of April 1, 1903. (See paragraph 31 of the petition; page 75

printed record.)

The petition among other things alleged:

That on the 4th day of September, 1899, the Town of Deca-

tur (now City of Decatur) granted a franchise to “Collins Park

& Belt Railroad Company” and that under said franchise the

line in question was constructed and being operated; said line

being known as Rapid Transit or North Decatur line. (See

paragraph 7 of the petition; printed record page 65.)

The Municipality did not allege or claim that said Municipal

franchise required perpetual, never ending street railway op-

eration.

The petition alleged that, subsequent to the granting of

said franchise and on April 1, 1903, the City of Decatur and

the street railway companies entered into a rate contract

wherein the street railway companies agreed to never

more than five (5) cents for one fare upon the said Rapid

Transit line.

That the street railway companies, by proper corporate

action, had undertaken to end, surrender or terminate its

franchise and contract and to cease any further operation

within the Municipality; that in pursuance thereof they had

served written notice upon the Municipality that the street

railway companies would discontinue street railway operation

of said Rapid Transit line on the 30th day of September, 1925,

Therefore, the Municipality of Decatur instituted its present

equitable action against the street railway companies, to com-

pel continued, perpetual, never ending street railway operation

within the Municipality of Decatur, basing its said suit en-

tirely upon the Municipal rate contract of April 1, 1903. (See

page 75 printed record, paragraph 31 of petition.)

The street railway companies, the Georgia Railway & Power

Company and Georgia Railway & Electric Company, (subse.

quently consolidated into the Georgia Power Company) by

answer and cross bill, showed that the street railway line in

question, within the Municipality of Decatur, was constructed

and being operated under the franchise of September 4th,

1899, granted to “Collins Park & Belt Railroad Company“; said

line having been acquired by the Georgia Railway & Electric

Company; that on April 1, 1908, the Georgia Railway & Elec.

tric Company and the Town of Decatur entered into a rate con-

tract fixing a five (5) cents rate of fare thereon; that neither

the franchise nor the rate contract placed a never ending ob-

ligation on the street railway company to perpetually orerate

in Decatur. That the street railway companies, by corporate

action, had surrendered, terminated and ended said franchise

and rate contract i i question, and surrendered all their rights

to continue operation thereunder. That the action on the part

of the Municipality in refusing to accept such surrender was

illegal and unconstitutional. The rate of fare charged under

the rate contract was not sufficient to pay bare operating ex-

penses, the cost of rendering the service being two (2) cents

per passenger more than the fare it could charge therefor.

That the said rate of fare was both confiscatory and discrimi-

natory. That proper corporate action had ended, terminated

and surrendered the Decatur franchise and contract; that they

did not require continued and perpetual, never ending street

railway operation and that the property of the street railway

company would be continually and perpetually confiscated in

violation of the 14th amendment of the Constitution of the

United States, if the action brought by the Municipality was

eld and the street railway companies restrained from and

denied the right to end, terminate and surrender the franchise

and contract were not permitted to cease further operation

thereunder; that compelled never ending operation would re-

suit in never ending confiscation of the property of the street

railway companies.

The answer alleged that in former litigation the street rail-

way companies, while continuing to operate under the contract

in question, had undertaken to compel the Georgia Public Serv-

ice Commission to fix a reasonable rate of fare, but that the

Supreme Court of the State of Georgia had held that the line

in question was a separate and distinct classification from the

other lines placed under the Commission’s jurisdiction and,

that the Public Service Commission had been given no juris-

diction to fix the fare to be charged thereon; that then, the

street railway company, while operating under the contract,

itself undertook to raise the rate of fare; that said action on

the part of the street railway company had been enjoined by

the City of Decatur. In this litigation the charter power of the

Municipality to enter into a raté contract had been upheld, and

it was also held that the said line in Decatur was a separate

and distinct classification from the other street railway lines.

The right to entirely discontinue the operation of said line in

Decatur is involved in the present litigation.

That the City of Decatur had recently secured a charter

amendment authorizing it to pave its streets along which the

line in question was being operated, and assess paving costs

against the street railway company operating thereon. The

street railway company had requested the Municipality to re-

lieve it from such burdens. On account of the facts alleged in

the answer and cross bill the street railway company could re-

ceive no benefits from said street paving. That the City of

Decatur had refused all requests to relieve the street railway

company from the paving assessment, and were proceeding to

pave said streets; that if the company was compelled to con.

tinue operation the City of Decatur would assess an amount

of over $14,000 against the street railway company and from

the facts (detailed in the answer) such assessment would

further confiscate the property of the street railway company

in violation of the 14th Amendment of the Constitution of the

United States. The answer and cross bill alleged that such

assessment gave the street railway company an additional

right to cease entire operation within the Municipality of De.

catur, as neither the Municipal franchise nor the Municipal

rate contract compelled perpetual, never ending street railway

operation within the Municipality and the line did not even

make operating expenses, without the additional burden of the

paving assessment.

The street railway company tendered and offered the City

of Decatur its entire street railway line and property located,

constructed and operated within the said Municipality under

the Municipal franchise or contract in question. (Printed rec.

ord page 93.)

The street railway company also prayed, in its answer and

cross bill, that, under the facts therein set out, the Court de-

clare said contract or franchise ended, terminated, and sur-

rendered and that it be relieved from further operation there.

under.

The case was heard before the Superior Court of DeKalb

County upon an agreed statement of facts. The facts set up in

the answer and cross bill being introduced and taken as evi-

dence. (Printed record pages 60-61.}

The evidence in the case was undisputed and showed: That

the five (5) cents rate of fare was both confiscatory and dis-

criminatory ; that continued or compelled operation would con-

fiscate the property of the street railway company without the

paving assessment; and, that the paving assessment would

occasion further or additional confiscation ; that the street rail-

way company had taken proper corporate action terminating,

ending and surrendering all its right to future or further oper-

ation within the Municipality of Decatur.

The trial court entered a final decree and adjudged that the

street railway companies be and are enjoined as prayed in the

petition. (Printed record page 96.) The effect of said decree

was to hold, that the Municipal rate contract of April 1, 1903,

required perpetual, never ending street railway operation with-

in the Municipality of Decatur; that said rate contract was a

perpetual, never ending one and could never be ended, termi-

nated or surrendered by the street railway companies.

The Supreme Court of the State of Georgia, the highest

court of the State in which a decision could be had, upheld the

decision of the trial court and based its decision exclusively

and entirely upon the Municipal rate contract of April 1, 1903.

(For this decision see printed record pages 97-103.)

FEDERAL QUESTION INVOLVED

Unless the Municipal rate contract of April 1, 1903, itself,

compels perpetual never ending street railway operation, and

cannot be ended or terminated, the effect of the decision of the

Supreme Court of the State of Georgia is to deprive the street

railway company of its property ‘without due process of law in

contravention of the 14th Amendment ef the Constitution of

the United States. The admitted and undisputed facts estab-

lish the proposition that compelled, continued and perpetual

operation requires the street railway company to perpetually

render a public utility service at both a confiscatory and dis-

criminatory rate of fare, resulting in continual and never end-

ing confiscation of the property of the street railway company,

in violation of the 14th Amendment of the Constitution of the

United States; and that such compelled operation will also

subject it to other confiscatory burdens in contravention of

the 14th Amendment of the Constitution of the United States.

Such constitutional questions being specifically raised, in the

case at bar, this Court determines for itself, the extent and

duration of the Municipal franchise and rate contract and

whether they are still in existence; whether they are perpet-

ual, or whether they have expired, or been performed, termi-

nated or surrendered.

Federal Judicial Code Section 344 (b), (formerly Judicial

Code Section 237, as amended by the Act of February

8rd, 1925).

Railroad Commission of Texas vs. Eastern Texas Railroad

Company, 264 U. S. 79, 86.

Columbus Railway, Power & Light Company vs. Colum.

bus, 249 U. S. 399, 406, 407.

See also the following cases decided by this Court, in which

similar questions to the one involved in the case at bar were

brought to this court for review, and the decisions therein ren.

dered by this Court, we respectfully submit, are controlling in

favor of the contentions of the Georgia Power Company here.

inafter discussed.

Cleveland E. R. Co. vs. Cleveland, 204 U. S. 116.

Detroit U. R. Co. vs. Detroit, 229 U. S. 39.

Blair vs. Chicago, 201 U. S. 400.

FORMER LITIGATION

In 1918 the street railway company brought a mandamus

suit to compel the Railroad Commission of the State of Ceor-

gia (now Georgia Public Service Commission) to assume ju-

risdiction and fix fares over various street railway lines. The

City of Decatur contended that the Decatur Municipal rate

fare contract of April 1, 1908, separated it from the other

street railway lines and franchises, and that the Georgia Leg-

islative Act of 1907 (Georgia Code Section 2662) conferring

jurisdiction upon the Georgia Public Service Commission, had,

in its proviso, exempted said line from the commission's ju-

risdiction.

The Supreme Court of the State of Georgia upheld the said

contention of the Municipality of Decatur.

Georgia Railway & Power Company vs. Railroad Commis-

sion of Georgia, 149 Ga. 1.

The street railway company itself then sought to change the

Decatur rate of fare and notified the City of Decatur that it

would charge an increased rate of fare after a certain date.

The City of Decatur brought a suit to enjoin such increase,

contending that the street railway company had no power or

authority to change its rate of fare; that, while the street

railway company continued to operate under the Municipal

rate contract, it could not exercise such rights and at the same

time escape or relieve itself from the burdens and obligations

therein imposed.

In said litigation the questions decided were whether the

Municipality of Decatur had charter power to make or enter

into a rate contract; and whether the proviso of the Georgia

Act of 1907 (Georgia Code Section 2662) made an unreason-

able and unconstitutional classification.

The Georgia Supreme Court held that the street railway

company was invested with no powers to change its fares; that

the Municipality of Decatur had charter powers to enter into

a rate contract; that there was no unreasonable classification

in exempting the Decatur line in question from the jurisdiction

of the Georgia Public Service Commission.

Georgia Railway & Power Company vs. Town of Decatur,

152 Ga. 148; same case in 153 Ga., on final hearing.

Said decision of the Georgia Supreme Court (as te the above

questions) was affirmed by this Court.

Georgia Railway & Power Company vs. City of Decatur,

262 U. S. 433.

In said former litigation the power and authority of the

parties to enter into a rate contract has been upheld. The rec-

ord in such former litigation was not introduced in evidence

and is not a part of the record in this case, as, what was there

adjudicated does not affect the questions here raised.

In the present litigation the power and authority of the

parties to enter into a rate contract is not raised, and neither

is the street railway company, while continuing to operate

under the franchise or contract, undertaking to charge a rate

of fare different from that therein provided.

The present litigation involves the right of the street rail-

way company to surrender or terminate the franchise or con-

tract; whether or not it has expired, been terminated or ended;

and whether the street railway company can perpetually be

compelled to operate thereunder at a confiscatory rate of fare.

—

A similar situation existed in the case of Cleveland Electric

R. Co. vs. Cleveland, 204 U. S. 116, 130. There it appeared that

the Supreme Court of the United States had twice theretofore

rendered opinions upholding the validity of the Municipal rate

contract, so when the case was again brought before this Court

it said: “Therefore, in deciding this case, we assume the

lidity of the contract whatever it is that was made. The only

question involved herein is one of construction and intent,”

This Court then decided for itself the duration of the various

Municipal franchises and rate contracts therein involved.

QUESTION BEFORE THIS COURT FOR ITS

DETERMIN ATION

The facts in the case being undisputed the question for de

cision by this Court is purely a question of law, to-wit:

Whether the Decatur Municipal franchise of September 4th,

1899, and/or the Decatur Municipal rate contract of April 1,

1903, compelled perpetual, never ending street railway opers-

tion within the Municipality of Decatur; and whether the said

franchise and contract are such perpetual, never ending con-

tracts as can never be ended, terminated or surrendered by

the street railway company?

ASSIGNMENTS OF ERROR

The specifications of error set out in the certiorari, granted

by this Court, are as follows, to-wit:

(1) The Supreme Court of the State of Georgia erred in

finding and holding that the Municipal rate contract of April

1, 1903, requires perpetual, never ending street railway service

within the Municipality of Decatur and that said contract was

a perpetual, never ending one.

(2) The Supreme Court of the State of Georgia erred in not

holding that the contract of April 1, 1903, had been performed,

expired or terminated, or legally surrendered, and erred in

holding that said contract could not be terminated, ended or |

surrendered by the street railway companies ceasing to oper- |

ate within the Municipality. |

(3) The Supreme Court of the State of Georgia erred in not

holding that the Municipal rate contract of April 1, 1908,

should be construed in connection with the franchise of Sep-

tember 4, 1899, and that said franchise and contract had been

performed, expired, terminated or legally surrendered.

(4) The Supreme Court of the State of Georgia erred in not

holding and finding that said contract of April 1, 1903, re-

ferred and applied to street railway lines as operated under

the franchise of September 4th, 1899, and that said contract

taken in connection with said franchise, or said Municipal con-

tract taken alone, did not require perpetual, never ending street

railway operation within the Municipality of Decatur.

In considering the said assignments of error we first discuss

the Municipal franchise of September 4th, 1899, under which

the line in question was constructed and operated, although

we do not believe, the attorneys for the Municipality will con-

tend that it compelled continued fu:ther operation.

THE FRANCHISE UNDER WHICH THE LINE IN QUES-

TION WAS CONSTRUCTED AND BEING OPERATED

HAS EXPIRED AND BEEN TERMINATED BY

TIMELY WRITTEN NOTICE.

The line in question was built, constructed and being oper-

ated under a franchise from the Town of Decatur to the “Col-

lins Park & Belt Railroad Company.” Said Municipal franchise

was granted on September 4th, 1899, to “Collins Park & Belt

Railroad Company” and was not a grant to said Company, its

successors and assigns.

(See agreed statement of facts, printed record pages 6-8,

where the entire franchise is set out.)

In 1900 the name of the “Collins Park & Belt Railroad Com-

pany” was changed to “Atlanta Rapid Transit Company.”

In 1902 the “Atlanta Rapid Transit Company” conveyed all

its property, together with its different lines of street railway

to the “Georgia Railway & Electric Company.” (See printed

record page 13.) a

The change of the name of Collins Park & Belt Railroad

Company” to “Atlanta Rapid Transit Company” and the deed

from Atlanta Rapid Transit Company to Georgia Railway 4

Electric Company are only material as showing the chain of

title of the franchise in question into the Georgia Railway &

Electric Company.

When, the said franchise had a further duration of over 16

years (and on the Ist day of April, 1903) the Georgia Railway

& Electric Company entered into a contract with the Town of

Decatur fixing a five (5) cents rate of fare to be charged on

said line designated and specifically described in said contract

as the Rapid Transit Line.

The franchise in question expired August 16, 1919; and

thereafter continued operation thereunder, since said date, has

been similar to a tenancy at will or at sufferance.

“The Collins Park & Belt Railroad Company” was incorpo-

rated under the Acts of the General Assembly approved by the

Legislature of Georgia on August 16, 1899.

(See agreed statement of facts, printed record pages 1-5,

where the entire Act is set out.)

The duration of its charter was not therein specifically set

out, therefore, under the laws of Georgia, its charter expired

30 years from the date of its grant or 30 years from August

16, 1889, i. e. August 16, 1919.

Georgia Code 2215 provides:

rporations have continuous succession during

the time limited by their charter, notwithstanding

the death of their members. Should any charter

granted in future by the General Assembly to a pri-

vate corporation be silent as to its continuance, such

charter shall expire at the end of 30 years from date

of its grant.”

See also:

West End & Atlanta St. R. Co. vs. Atlanta St. R., 49 Ga.

151 (1).

The Central R. & B. Company vs. State of Georgia, 54 Ga.

404, 420, 422.

The franchise in question granted on September 4th, 1899,

to the Collins Park & Belt Railroad Company” contained no

words of grant to its heirs, successors or assigns.

(Printed record, pages 6-8, where the entire franchise is

set out.)

Under all the authorities, the duration of such franchise, is

for and during the charter life of the Company, therefore, the

said municipal franchise of the said Rapid Transit line in De-

catur expired August 16, 1919.

Turnpike Co. vs. Illinois, 96 U. S. 63.

Blair vs. Chicago, 201 U. S. 400.

Omaha Electric Light & P. Co. vs. Omaha, 179 Fed. 455

(3), 460.

Wyandotte Elec. Lt. Co. vs. City of Wyandotte, 124 Mich.

43; 82 N. W. 821.

Rockwith vs. St. Road Bridge Co., 108 N. W. 785.

The conveying of this franchise to successive street railway

companies did not change its duration, and is immaterial ex-

cept as showing title thereto.

Virginia Cannon Toll Road Co. vs. People, 22 Col. 429; 37

L. R. A. 711, 718, 719.

Blair vs. Chicago, 201 U. S. 400, see pages 481, 482.

The said Decatur franchise having expired on August 16,

1919; subsequent operation thereunder within the Municipal

limits of Decatur constituted a relationship between the said

Municipality and the operating street railway company similar

to that of a tenancy at will.

Omaha Electric Light & Power Company vs. City of

Omaha, 179 Fed. 455 (3), 460.

Detroit United Ry. Co. vs. City of Detroit, 229 U. S. 39, 42.

City and County of Denver vs. New York Trust Co., 229

U. S. 128, 142.

Or a tenancy at sufferance.

Sutton vs. Hiram Lodge, 83 Ga. 770.

Standley vs. Stembridge, 140 Ga. 750 (5), 754, 757.

Crawford vs. Crawford, 139 Ga. 394 (4), 396, 399.

aur

Either of such tenancies can be terminated by either party

by reasonable notice.

Denver vs. Denver Union Water Co., 246 U. S. 178, 184,

Western U. Tel. Co. vs. Fain & Parrott, 52 Ga. 19, 22.

On the question of notice see also:

sae vs. City of Utica, 179 Fed. 885, and cases there

cited.

In a tenancy at will or a tenancy at sufferance a party while

continuing to occupy the premises cannot escape the burdens

incident thereto; but either party can terminate such burdens

and put an end to such further, continued relationship by

notice.

Kenny vs. Knight, 119 Fed. R. 475 (2).

All the authorities hold that operation under an expired

Municipal franchise creates an exactly similar relationship,

See cases heretofore cited.

The street railway companies took proper corporate action

terminating and surrendering the franchise in question.

(See printed record pages 42-47.)

Proper and reasonable notice of such action was given to the

Municipality, the only party upon whom such notice could be

served.

(See printed record pages 42-47.)

The franchise having expired and the holding over having

been terminated by due and reasonable notice, it is inconceiy-

able how the City of Decatur can sustain the decree perpetu-

ally enforcing continued street railway operation.

It certainly would not be held that a landlord could success-

fully maintain a suit in equity and by injunction perpetually

compel a tenant at will or sufferance to continue to occupy his

premises because the landlord desired to enjoy for all time to

come the benefits he was receiving by such continued occu-

pancy. Yet, that is exactly what is done by the decision in

question.

We have found no case in conflict with the legal principles

just heretofore discussed.

We respectfully submit, that the Supreme Court of Georgia

in effect, admits the legal contention just heretofore stated,

to-wit; that the franchise in question has expired, terminated

and ended; for, that Court in its opinion said “It is not so

much the franchise we are dealing with, but the specific con-

tract made in pursuance thereof”; and then based its opin-

ion upon the contract of April 1, 1903.

(See printed record page 101.)

We submit that under a number of decisions of this Court

the duration of the franchise and the right to surrender it,

is decisive of the duration and the right to surrender a con-

tract made with reference thereto. ji

Cleveland E. R. Co. vs. Cleveland, 204 U. S. 116, 130.

Detroit U. R. Co. vs. Detroit, 229 U. S. 39.

Blair vs. Chicago, 201 U. S. 400.

The contract of April 1, 1908, in referring to the Rapid

Transit line did not undertake to change the duration of the

franchise under which said line was being operated or the

right of the parties to terminate it or cease operation there-

under.

This Court has repeatedly held that the duration of Mu-

nicipal franchises and contracts cannot be extended by im-

plication. :

Detroit U. R. Co. vs. Detroit, 229 U. S. 39, 48, 44.

Blair vs. Chicago, 201 U. S. 401, 471, 474.

MUNICIPAL CONTRACT OF APRIL 1, 1903

Said Municipal rate contract is set out in full on pages 13-19,

printed record.

We respectfully submit that an unbroken line of decisions

of this Court hold that contracts similar to the Municipal rate

contract of April 1, 1908, does not extend the duration of the

then existing Municipal franchise.

In cases in which this Court has had Municipal contracts,

(with much broader provisions than those contained in the

contract of April 1, 1903) before it for consideration, it has

in every case held that such contracts did not extend or en.

large the duration of the former Municipal franchise.

Cleveland Electric R. Co. vs. Cleveland, 204 U. S. 116.

Detroit U. R. Co. vs. Detroit, 229 U. S. 39.

Blair vs. Chicago, 201 U. S. 400.

In said cases it was the street railway company which con-

tended that certain Municipal contracts (entered into between

the street railway company and the Municipality) had the ef.

fect of extending the duration of former Municipal franchises;

and that under such Municipal contract the street railway

company had been given the right and authority to continue

operation upon the streets in the Municipality. We respectfully

submit, that the Municipal contracts under consideration in

each of said cases were more susceptible of such construction,

than is the Municipal rate contract in the case at bar. Never-

theless this Court, in each case, held, that under the principle

of law as repeatedly announced by it, it was impossible to hold

that the Municipal contract extended the duration of the fran-

chise and therefore the street railway company only had the

right to operate within the Municipality for and during the

franchise period. For instance see the case of Detroit U. R.

Co. vs. Detroit, 229 U. S. 39, 43-45 (where former cases of this

Court are quoted and discussed). It is, of course, immaterial,

that in the case at bar, it is the street railway company which

contends that the Municipal rate contract in question does not

extend the duration of its franchise; and that, therefore, un-

der such Municipal rate contract it cannot be required to ren-

der perpetual, never ending operation and service.

Such Municipal rate contracts are to be similarly construed,

whether the street railway company is contending that it has

the right to further operate thereunder, or is denying the Mu-

nicipality’s right to compel never ending operation there-

under.

Applying the principle of law (as announced in the cases

of this Court just heretofore cited) to the Municipal rate con-

tract involved in the case at bar, then as held by this Court in

the case of Denver vs. Denver Union Water Company, 246

U. S. 178, 184: “It is a necessary corollary that the Company

may discontinue its service at will.”

The Municipal rate contract of April 1, 1903, did not eæ-

pressly or by implication extend the duration of the franchise,

under which the line in question was constructed and being

operated within the City of Decatur, and did not and could not

affect franchises from other Municipalities.

This contract first deals with discontinuance and removal

from the streets of Decatur of a line of track known as the At-

lanta Railway Company and required the street railway com-

pany upon such removal to restore the surface of the streets

in good condition. There is no contention that the franchise

of the Atlanta Railway Company in Decatur had not expired

long prior to the present litigation. The discontinuance of the

Atlanta Railway Company’s line 26 years ago (in 1903) does

_ not affect the duration of the franchise of the Atlanta Rapid

Transit line.

The other parts of the said contract by actual terms and

description relate and refer to “Atlanta Rapid Transit Line.”

There is not a word or line which, either expressly or by im-

plication, deals with or undertakes to extend the duration of

the franchise of said Rapid Transit Line. The length of time

said line must operate in Decatur is not extended. When the

contract of April 1, 1908, was made it did not and was not

intended to cover or deal with such questions. The Decatur

Municipal franchise, under which the Atlanta Rapid Transit

Line was being operated had not expired; by its own terms it

was to continue for a further duration of 16 years. The said

contract of April 1, 1903, was not intended to and did not

(either expressly or by implication) undertake to modify, en-

large or change, or deal with that question.

We respectfully submit that the contract of April 1, 1903,

in no way changed the duration of the Municipal franchise of

Atlanta Rapid Transit Company line (heretofore discussed)

or the rights of the parties with reference to its termination

or surrender.

The Supreme Court of Georgia largely relied upon the ex-

pression of the contract “to never charge more than five cents

for one fare.”

The provision of the contract is “to never charge more than

five cents for one fare, upon its Decatur line above referred

to as the Rapid Transit Line.” (The said line in Decatur is

then described in detail.)

It will be seen that said provision or contract as to the rate

of fare was made with reference to the line already constructed

and in operation. It fixed the rate of fare while the line was

operating. Such provision did not undertake to compel per-

petual and never ending operation.

This exact question was before this Court in the case of

Cleveland E. R. Co. vs. Cleveland, 204 U. S. 116, in which it

was held that the Municipal rate contract did not change the

duration of the franchise.

See also:

Detroit U. R. Co. vs. Detroit, 229 U. S. 39, 43, 44, 45.

In Charleston-Isle of Palms Traction Co. vs. Shealey, 266

Fed. Rep. 406, the Court held that a five (5) cents rate of fare

was fixed by contract; and that the street railway company

was bound thereby while it operated thereunder; but, also

further held; that the street railway company had the consti-

tutional right to cease operation thereunder and thus avoid

the confiscatory rate.

As to such right to discontinue operation, see also:

Railroad Commission of Texas vs. Eastern T. R. Co., 264

U. S. 79, 85, 86.

In the case of Brooks-Scanlon Co. vs. Railroad Commission

of La., 251 U. S. 396, this Court held: “A carrier cannot be

compelled to carry on even a branch of business at a loss.”

In the case of State of Iowa vs. Old Colony Trust Company,

215 Fed. 307, 313 (cited approvingly by this Court in many

cases), the Court held that “A railroad company may abandon

an unprofitable and irreclaimable part of its road and neither

the State nor unfortunate investors along the line can justly

complain.”

In the case of Munn vs. llinois, 94 U. S. 118, 192, this Court

said:

“The grantor may withdraw his grant by discon-

tinuing the use; but so long as he maintains its use,

he must submit to the control.”

To the same effect see:

Erie Railroad Co. vs. Board of Public Utility Commission-

ers, 254 U. S. 394, 411.

It has been repeatedly held that a street railway company

can surrender such a franchise as the one in question to the

Municipality which granted it.

Stiles vs. Citizens Electric Street Railway Co., 19 L. R.

A. (N. S.) 865; 199 Mass. 294, 85 N. E. 419.

State of Montana & Knight vs. Power Company, 44 L. R.

A. 692; 22 Montana 391; 65 Pacific 685.

San Antonio Street Railway Company vs. State of Texas,

35 L. R. A. 662; 30 S. W. 926.

Charleston-Isle of Palms Traction Co. vs. Shealey, 266

Fed. 406. ih

Southern Bell Tel. & Tel. Co. vs. Railroad Commission of

South Carolina, 280 Fed. Rep. 901, 902 (7).

Gilschrist vs. Waycross Street & Suburban Railroad Co.,

246 Fed. Rep. 952.

The Supreme Court of the State of Georgia said:

“When this contract was before the Supreme Court

of the United States (262 U. S. 438 supra) the Court

said with reference to the duration of this contract,

that this contract would remain effective until there

should be conflicting legislative action'.“

That case arose over an endeavor on the part of the street

railway company, while operating under the franchise to

change the contract rate of fare as added to the franchise by

the contract of April 1, 1903. The street railway companies had

served notice on the Municipality of Decatur that on and after

Oetober 20, 1920, it (the street railway company) would charge

a seven (7) cents rate of fare on the said North Decatur or

Rapid Transit Line. The Municipality of Decatur then brought

an equitable suit to enjoin the street railway company, while

operating under the franchise in Decatur, from changing the

rate of fare, as provided in the contract. In answer to such suit

the street railway company contended lack of power and au-

thority in the Town of Decatur to make a rate contract; that

the rate of fare provision was not a contract.

The decision of this Court shows that it was dealing with

such questions and not with the right of the Municipality to

compel perpetual, never ending operation thereunder.

The question there decided is entirely different from the one

involved in the present litigation. As controlling on this ques-

tion see:

Cleveland Electric R. Co. vs. Cleveland, 204 U. S. 116, 130.

The Supreme Court of the State of Georgia says that the

contract of April 1, 1903, if not expressly, impliedly gives con-

sent to the operation of the line in question within the Mu-

nicipality.

The provision of the contract to which the Supreme Court

of Georgia was referring is as follows:

“To gradually from time to time, as it may obtain

permission so to do and may have funds available for

such purpose, double track said Rapid Transit Line

from terminus to terminus, the loop already being

described in the Town of Decatur being considered a

double track; provided the time within which said

double track shall be completed does not exceed five

years in the event it can obtain permission to con-

struct said double track, which said double irack,

when completed shall be maintained in a substantial,

safe and expeditious manner and shall be operated

with cars and rolling stock kept in safe and comfort-

able condition. Permission to construct said double

track in the Town of Decatur is hereby granted.”

That such and similar provisions do not extend the duration

of the franchise (the franchise of September 4, 1899, hereto-

fore discussed) was held by this Court in Cleveland Electric

R. Co. vs. Cleveland, 204 U. S. 116.

See also:

Detroit U. R. Co. vs. Detroit, 229 U. 8. 39, 44, 45.

Blair vs. Chicago, 201 U. S. 400.

The said provision of the contract was not an undertaking

on the part of the parties to change or affect the duration of

the franchise under which the line was being operated.

The agreed statement of facts show that no double track

was laid within the Municipality of Decatur under it; how-

ever, this is immaterial for as held in the Cleveland case (204

U. S. 116, 187-140), a right given to construct an additional

track would not extend the duration of the franchise under

which the single line has been constructed. In fact, the con-

tract in question, provides that the loop in Decatur (as already

constructed) was to be considered a double track. Nothing said

in said contract was intended te affect the duration of fran-

chises received from other Municipalities. While operating, a

legal duty rests upon the company to maintain its tracks in a

safe and expeditious manner and to keep its cars and rolling

stock in good and comfortable condition. This, however, does

not compel perpetual, never ending operation at a loss.

State of Texas vs. Eastern Texas R. Co., 264 U. S. 79, 85.

Also see:

Texas & P. R. Co. vs. Marshall, 136 U. S. 393.

Jones vs. Newport News, 65 Fed. 736, 741 (2).

Texas & P. R. Co. vs. Scott, 77 Fed. 726 (2), 730.

In the case of Cleveland E. R. Co. vs. Cleveland, 204 U. S.

116, 133, the grants then being considered by this Court spe-

cifically referred to lines which were to be operated in con-

nection with other and different lines. Nevertheless this Court

held that such reference did not have the effect of extending

the duration of any line, though the lines referred to had fran-

chises of longer duration.

Let us assume that on September 4th, 1899, the City of

Decatur, as landlord, had rented certain of its property to a

person, as lessee. The lease provided that said property was to

be used for hotel purposes and that the duration thereof was

for a period of 30 years. Subsequent thereto and on April 1,

1908 (sixteen years prior to the expiration of said lease), the

landlord and tenant had entered into a contract with reference

to said hotel property; by which the tenant, for a valuable con-

sideration, agreed “to never charge its guests more than a rate

of $1.00 per room”; and also agreed “to put an elevator in the

hotel and from time to time paint or repaper the rooms, and

to maintain and operate the hotel in a safe and comfortable

manner”; certainly such supplemental contract, of April 1,

1903, would not be held to change the duration of the original

lease and convert it into a perpetual, never ending one. Such

supplemental contract of April 1, 1908, would be taken and

construed in connection with the duration of the original lease.

Occupancy of the premises by the tenant, after the expira-

tion of the lease, would, of course, subject the tenant to the

burdens or obligations incident to such continued occupancy,

However, such continued occupancy would not give the tenant

the legal right to claim a perpetual, never ending lease. Simi.

larly, the landlord could not require the tenant to

continue as his tenant because he occupied the premises, after

the expiration of the lease.

Under the authorities heretofore cited, such continued oc

cupaticy constituted a tenancy at will or at sufferance, and can

be terminated by either party by reasonable notice.

This Court has repeatedly held that contracts similar to the

contract of April 1, 1903 (involved in the case at bar), did not

give the street railway company the right of perpetual, con-

tinued and never ending operation upon the streets of the

Municipality and did not have the effect of extending the du-

ration of a former Municipal franchise.

Cleveland E. R. Co. vs. Cleveland, 204 U. S. 116.

Detroit U. R. Co. vs. Detroit, 229 U. S. 89, 44, 45.

Blair vs. Chicago, 201 U. S. 400.

See also cases cited under the next head of this brief.

It follows, as a corollary, that if the street railway company

cannot successfully claim that such a contract gives it the

right to perpetual, never ending operation upon the streets of

the Municipality; then the Municipality (basing its action on

the same or a similar contract) cannot compel the street rail-

way company to continual, perpetual, never ending street rail-

way operation.

THE PRINCIPLE OF LAW REPEATEDLY ANNOUNCED

BY THIS COURT IN CONSTRUING MUNICI-

PAL CONTRACTS

This Court has repeatedly held that Municipal rate contracts

do not compel perpetual and never ending operation.

In the case of Texas & P. R. Co. vs. Marshall, 136 U. 8. 393,

this Court held; that a Municipal contract providing that in

consideration of certain donations made by the City, a railroad

agreed that it would permanently establish its terminus in the

City was performed by maintaining it there for eight years.

Certainly, under the undisputed facts in the case at bar, the

street railway company cannot be compelled to perpetually op-

erate under the Municipal rate contract in question.

In the case of Home Telegraph & Tel. Co. vs. City of Los An-

geles, 211 S. 265, this Court expressly held that Munici-

palities possessing the power and authority to make rate con-

tracts can only make them for a definite time “not grossly un-

reasonable in point of time.” In subsequent decisions this Court

has restated and followed that legal principle. (For illustration

see cases cited in note [a].)

R. R. Commission of Cal. and City of Los — vs. Los

Angeles Ry. Corp., rendered Dec. 2nd, 1929.

Note (a) In Southern lowa Electric Co. vs. City of Chariton, 255 U. S.

359, the contract fixed a definite period of time, to-wit: 25

years. in the decision the Court said no one would contend

that a Municipality could make “a valid contract fixing per-

manent rates”.

In Freeport vs. Freeport Water Company, 180 U. S. 578, 600,

the contract was for a definite period—30 years.

In Detroit vs. Detroit City R. Co., 134 U. S. 368, the contract

was fixed for a certain definite period—30 years.

In Knoxville Water Co. vs. Knoxville, 189 U. S. 434, the Knox-

ville Water Company contended that there was a Municipal

rate contract for a definite period of 30 years. However, the

Court held that there was not a contract fixing a rate for a

definite term and permitted a change in rates.

In Cleveland vs. Cleveland City R. Co., 194 U. S. 519. see pages

585, 536, the contract was entered into in February, 1885, and

The contract of April 1, 1909, was made with reference ty

the Rapid Transit line constructed and being operated under

the franchise of September 4, 1899. The duration of said fran.

chise was not extended by the said contract of April 1, 1903.

If only the said contract itself is considered, then there is no

provision in it that it is to be a perpetual, never ending con.

tract.

If it is claimed that no limit as to duration is specified there.

in; then the rule of law practically universally followed is that

such contracts can be terminated after reasonable length of

time and upon reasonable notice.

In Jones vs. Newport News & M. Co., 65 Fed. 736, Judge

(now Chief Justice) Taft held:

“The petition makes no better case for the plaintiff

on the theory of a contract than on a common law lia-

bility. It is not alleged that either the defendant or

its predecessor agreed to keep the switch on the main

line for any definite length of time, or that either ex-

pressly agreed to keep it there forever; the plaintiff

contends, that, nothing having been said as to the

time, the * is that the switch is to be main-

tained at all times — forever. Such a construction is

uite at variance with the views of the Supreme

urt, as expressed in Texas & P. R. Co. vs. Marshall,

136 U. S. 393; 10 Sup. Court 846.“

See also:

Chattanooga R. & C. R. Co. vs. Cincinnati, N. O. & T. P. Ry.

Co., 44 Fed 456 (8).

The City of Decatur by virtue of compelled operation of the

line in question is also further seeking to impose paving assess.

ments against the street railway company amounting to $14.

000 from which the street railway can receive no benefits. The

pleadings show that tlie street railway company tendered to

the Municipality its property located therein along and adja.

cent to the streets to be paved and its entire street railway

property constructed and located within the Municipality of

Decatur under the franchise and contract heretofore discussed,

The Municipality admits that such property is not worth the

amount of the assessment by refusing the tender of such prop-

erty. We respectfully submit, under the principle of law laid

down by this Court in the case of Erie Railroad Company vs.

Public Utility Commission, 254 U. S. 394, 411, such facts give

the street railway company the constitutional right to cease

operation within the Municipality. In that case this Court said:

“If the burdens imposed are so great that the railroad cannot

be run at a profit, it can stop, whatever misfortune the stop-

ping might produce.” Certainly the Municipal rate contract in

question does not deny the street railway company its consu-

tutional right to cease operation under such facts.

The Supreme Court of Georgia cites the case of Fort Smich

Light & Traction Compeny vs. Fargan Bourland, 267 U. S. 300.

We respectfully submit that the case is not applicable; the

facts in that case were as follows:

The street railway lines within the Municipality of Fort

Smith were constructed and operated under a franchise from

the Municipality. In 1919 the franchise, together with its ob-

ligations and requirements, was, pursuant to a statute of the

State of Arkansas, surrendered for an indeterminate permit;

the express provisions of which bound the street railway com-

pany to operate all its lines within the Municipality unless

permitted to abandon a part thereof with leave of the City

Commission, which exercised the powers of a public utility

commission. Upon hearing, the said commission refused to al-

low the railway company to abandon a part of a line. Notwith-

standing this refusal and its continued operation under the

indeterminate permit the street railway company sought to

discontinue part of its line. The decision of this Court was

that the street railway company by accepting the indetermi-

nate permit had agreed to operate all of its street railway lines

and could not, therefore, continue operation thereunder and

escape the other burdens, which it had agreed to. The conclud-

ing paragraph of the said decision is:

“The company is at liberty te surrender its fran-

chise and discontinue operations chroughout the city.

It cannot, in the absence of contract, be compelled to

continue to operate its system at a loss. Brooks-Scan-

lon Co. vs. Railroad Commission, 251 U. S. 396. But

the Constitution does not confer upon the company

the right to continue to enjoy the franchise or inde-

terminate permit, and escape from the burdens inci-

dent to its use.”

In the case at bar the street railway company is not under-

taking to operate within the Municipality of Decatur under

the franchise or contract in question; but is seeking to sur-

render and cease operation thereunder “throughout the City.”

Whether the Decatur Municipal franchise has been per-

formed, ended, terminated or surrendered, or whether perpet-

ual, never ending operation thereunder can be comeplled is not

predicated upon the question whether other lines under other

and different Municipal franchises are still being operated.

Cleveland E. & R. Co. vs. Cleveland, 204 U. S. 116.

The instant suit brought by the Municipality of Decatur

seeks to compel perpetual operation under and by virtue of

the contract of April 1, 1903. The said contract and franchise

are separate and distinct from the other franchises and street

railway lines operated in other Municipalities under franchises

obtained from them. In fact the franchise in question has been

held to be a separate and distinct classification from all the

other lines and franchises of the street railway company.

In Georgia, the Public Service Commission has been given

no jurisdiction over this line and neither has it jurisdiction to

determine the question of discontinuance of service.

Railroad Commission of Georgia vs. Macon Railway &

Light Company, 151 Ga. 256.

The Georgia Public Service Commission has gone as far ag

it could; it has expressly held that the contract in qu

fixed a confiscatory rate; and, additionally held that said rate

of fare was discriminatory, in so far as all the other lines of

the company are concerned.

Printed record page 42.

To require perpetual, never ending operation under said con.

ditions would, to use the language of this Court in 194 U. 8

517, 584, lead “to consequences dangerous to public interest,

peace and tranquillity, the extent of which it would be difficult

in advance to see.”

Said fact under the decision of this Court in the case of

Texas & P. R. Co. vs. Marshall, 186 U. S. 898, is an additional

reason why the street railway company should not be com-

pelled to perpetually operate under said contract and should

not be denied the right to surrender all its rights thereunder,

WALTER T. COLQUITT,

BEN J. CONYERS,

Attorneys for Georgia Power Company.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.