# Respondents Brief — Broad River Power Co. v. South Carolina Ex Rel. Daniel > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0398%3A11 ## Record - **Collection:** Supreme Court brief - **Document type:** Respondents Brief - **Published:** January 1, 1930 - **Citation:** 281 U.S. 537 ## Text OCTOBER TERM, 1929 No. 528 BROAD RIVER POWER COMPANY, COLUMBIA RAILWAY, GAS AND ELECTRIC COMPANY, anw F. D, CAMPBELL, Petirionrrs, versus STATE OF SOUTH CAROLINA, Ex Ret, Jonn M. Danre., ATTORNEY GENERAL, Crry of CoLuMatiaA, Town or Arpen, Town or Eau Carre, Co- LuMaBIA CoLLEGE, Curcora COLLEGE FOR Women, Dr. W. B. Burney, Nortn Corumara Lanp Company, THE RAILROAD COMMISSION AND THE Coiumaia Scnoor Boarp BRIEF FOR RESPONDENTS * Joun M. Dantet, Attorney General, ‘ Coaprr Pacer, Asst, Attorney General, / Irvine F. BEvser, C. T, Graypon, ~ W. S. NELson, E. W. MuLuins, H. N. Epmunps, Solicitors for Respondents. THE R. L. BRYAN CO,, COLUMBIA, 8. Cc. 4-86.20.60 SYNOPSIS AND INDEX Broad River Power Company Organized 1924 to Acquite Columbia Railway, Gas & Electric Co. Columbia Railway, Gas & Electric Co. Chartered 1891 to Conduct Electric Street Railway, Light «chalice Bbetwa ca ah CF ae te City Franchise Ordinances Require Daily Oper- iis re rishi seks ckees oie eens tric Railway Neglected .................... Review of Legal Proceedings .................... he oss oes oo eos co ia. braced Electric Street Railway, Light and Power RHEE ESET te Sires NC Rear eee Pace Beery SUMAMATY ooo oko cece ccc cccne 4 CE PRD cies inks 6 S7 . INDEX OF CASES CITED PacE Atlantic & Gulf R. R. Co, v. State of Georgia, 98 U. S., Cay Oe Bh Ws BOP Se ic Cee 21 Attorney General, Ex Rel. Corp. Com. v. Elaverhill Gas Light Co., 215 Mass., 394, Ann. Cas., 1514-C, 1266 23 Atlantic Coast Line R. Co. v. North Carolina Corp. Com., PION: By 0, OF Sn MA 98S oe 24 American Railway Express Co. v. Kentucky, 273 U. S., gtk ed Lice th sag ROR SOP Peg ei TES 51 Arkansas So. R. R. Co. v. German Nat’! Bank, 207 U. Oy an oe by OR, OO ee 65 Atlanta v. Gate City Gas Light Co., 71 Ga., 106 ...... 56 American Railway Express Co. v. Commenwealth of Kentucky, 273 U. S., 269, 71 L. Ed., 639. ...... 65 Bullock v. State of Florida, 254 U. S., 513, 65 L. Ed, 380 42 Brooks-Scanion v. Railroad Commission, 251 U. S., 396, OPM MR WEE ae cries si enkcs hee: 23 Brooklyn L. Ins. Co. v. Dutcher, 95 U. S., 269, 24 1. spe, tg ET FOIE cheGe LSE 52 Index of Cases Cited (Continued) Consolidated Turnpike Co. v. Norfolk, etc., R. Co., 228 a ee oe es as Oe a Chenango Bridge Company v. Binghamton Bridge Co., 18 L. Ed., 137, 70 U. S., OE as dds ps CRAKS Fie L. Ed., 576 . RELL RKO SaE SEAMS LER SATbeebec ike < Cleveland v. Cleveland City R. Co., 194 U. S., 517, 48 L. WO I 56 8 As pk i vate bss Uo na L. Ed., "854 SS BE a ea eg eee T OS a Charleston Consolidated Ry. & Lighting Co. v. City Coun- cil of Charleston. 92 S. C., 127. 20... cece cacs, City R. Co. v. Citizens St. Ry. Co., 166 U. S., 557, 41 Re MUNG RINE see ane 04 hii Ki es Wei chs City of Portsmouth v. Va. Ry. & Power Co., 141 Va., 54, 39 ALL. R., 1510 Oe GES She 50 5565 6 URS AAKSD dp Central Railroad, etc., Co. v. Georgia, 92 U. S., 665, 23 Be OR DS POE ii ek ee Chicago Title, etc., Co. v. Doyle, 259 Ill, 489, 102 N. E, 7 ee, B,C SD, AO. Se. Toe. Chicago M. & St. Paul R. R. Co, v. Minneapolis C. & C. _ Asso., 247 U. S., 490, 62 L. Ed, 1229 .......... L. Ed., 170 Gk s UC KNeRRS ica awl oho Cock. Chicago v. Sheldon, 9 Wall., 50, 19 L. Ed., 594 ...... Chicago Bus Co. v. Chicag:: Stage Co., 287 Ill., 320, 122 EY SES |: ESS Ren EI cre Tce ears C. & N. W. Ry. Co. v. R. R. Com. of Wisconsin, 156 Wes, Oy tee a Oe oh ea Kaen Oe oe ee es Christman v. Miller (Cal. 1905), 107 U. S., 313, 49 L. WRG OE 6s ooo ep ak Fd se Pacs 37 37 Index of Cases Cited (Continued) District of Columbia v. Gallaher, 124 U. S., 505, 31 L. MME PPS Ss oe iaks See voli vi dieee se. Detroit v. Detroit Citizens’ St. Ry. Co., 184 U. S., ...., -sclo-otrnoon nacelle ETT Ee te re Day v. United States, 245 U. S., 159, 62 L. Ed., 219 .. Edwards v. Kearzey, 96 U.S., 601 .................. Franklin Telegraph Co. v. Harrison, 145 U. S., 459, 37 as yang. Cal aa Ce een ee ee Mee Oe We ONL ee Gibbs v. Consolidated Gas Co., 130 U. S., 396, 32 L. Ed., Great Northern R. Co. v. Donaldson (Wash. 1918), 246 . U. S., 121, 38 S. Ct., 230, 62 L. M4, G06. 3. Georgia Railway & Power Co. vy. Decatur, 262 U. S., sue, tachi, apna Canna BEE EO TEED EEC a Gates v, Boston & N. Y. A. L. R. R. Co., 53 Conn., 333, Pe Si ie er ea Interstate Consol. St. R. Co. v. Massachusetts, 52 L. Ed., BP ee vs bons crane cdkey Pace 22 71 Index of Cases Cited (Continued) Pace Illinois Trust & Saving Bank v. Doud, 105 Fed., 123, 52 Se Sey Sake | Ar oer er eer y ere 42 Jack v. Williams, 113 Fed., 823 (145 Bg BOR) wwedess 23 Jolly v. Martin, 120 S. C., 317 2... cc cee eens e eens 55 Jackson v. State, 280 S. W., 202, 103 Tex. Cr., 318, certiorari denied, 46 S. Ct., 474, 271 U. S., 661, ee A eM ey wath deseo - 71 Keokuk & W. R. Co. v. Missouri, 152 U. S., 301, 38 L. SENSE A ee A eter ye ora ame 38 Lincoln & K. Bank v. Richardson, 1 Me. 79 (10 Am. RE apne hee ene ory Ter ee 56 Lake Shore & M. S. R. Co. v. Ohio, 173 U. S., 285, 43 ES Se Rr ee eee 54 Lenawee County Gas & E. Co. v. City of Adrian, .... Mich., ...., 176 N. W., 590, 10 A. L. R., 1328... 53 Louisville Water Co. v. Clark, 143 U. S., 1, 36 L. Ed., 55 38 Milwaukee Electric Ry. & Light Co. v. State of Wis- consitt, 25210. S., 100, 64 L. Ed. 476 ..........6. 24 Municipal Securities Corp. v. Kansas City, 246 U. S., 63, re OO 8. i ics ass paca o. 65 Muscatine Lighting Co. vy. Muscatine, 256 Fed., 929 ... 62 Michigan R. Co. v. Lansing, 260 Fed., 322 .......... 58 Moorehead v. Union Light, Heat & P. Co., 225 Fed.,920 61 Memphis, etc., Ry. Co. v. Berry, 112 U. S., 609; 28 L. FR - LAASses eraser gine Cee tC tee aoe 37 Mercantile Trust Co. v. Denver et al., 161 Fed., 769 .. 56 Minneapolis v. Minneapolis St. Ry. Co., 215 U. S., 417, OE eS RCH pet pane args ere Gn rs ae 56 Missouri Pac. R. R. Co. v. Kansas, 216 U. S., 262, 54 Be WE oa Sse pees es Minneapolis & St. Louis Ry. Co. v. Minnesota, 186 U. S,, 257, 46 L. Ed, TS) 2.2... ec cess, aes ae Mt. Carmel Public Utility & S. Co. v. Public Utility Com., 297 Ti., 303, 21 A. L. R., 132. 6... cease. 43 Minneapolis, etc., R. Co. v. Gardner, 177 U. S., 332, 44 ata U. B. GLa By 798 ccc icc teeseeesete cess $B 4 Maine Cent. R. Co. v. Maine, 96 U. S., 499, 24 U. S. (L. iv McKell v. C. & O. Rwy., 175 Fed., 321 . McCandliss v. R. R. Co., 38 S. C., 103 Morawetz, Priv. Corp., S., 23. New York Elec. Co. v. Empire City Subway Co., 235 U. S., 179, 59 L. Ed., 184 Newton v. Carbery, 5 Cranch, C. C., 632 Northern Illinois L. & T. Co. v. Illinois Commerce Co., 302 Ill., 11, 234 N. E., 132 Norfolk & W. R. Co. v. West Virginia, 236 U. S., 605, 59 L. Ed., 745 Northern R. R. Co. v. North Dakota, 59 L. Ed., 735 . New Orleans Gas Light Co. v. La. Light, etc., Mfg. Co., U. S., 29 L. Ed., 516 New York ex rel. New York & Queens Gas Co. v. Mc- Call et al., 245 U. S., 345, 62 L. Ed., 337 New York ex rel. Woodhaven Gas Light Co. v. Public Service Com., 269 U. S., 244, 70 L. Ed., 255 .... Newton v. Consolidated Gas Co., 258 U. S., 165, 66 L. Ed., 538 Ottumwa R & Light Co. v. Ottumwa, lows, 173 N. W., 270 Old Colony Trust Co. v. Omaha, 230 U. S., 100, 57 L. Ed., 1410 Pomeroy Eq. Jur., Sec. 446 Perkins v. Sanders, 56 Miss., 732 Ed., 647 Peo. v. Colo. Title & Trust Co. (Colo.), 178 Pac., 6 es Potwin Place v. Topeka R. Co., 51 Kan., 609, 37 Am. Index of Cases Cited (Continued) Paige v. Schenectady R. Co., 178 N. Y., 102 ......... Pullman’s Palace Car Co. v. Missouri Pac. R. Co., 115 U. S., 587, 29 U. S. (L. Bd.), 499 «2.020005... Puget Sound Traction, Light & Power Co. v. Reynolds, 244 U. S., 574, 61 L. Ed, 1325 ... 6... cece ees Potter-Matlock Trust Co. v. Warren County, Ky., 207 FO ik Soe pV hae s 63 Oh CEE eines Prentis v. Atlantic Coast Line Ry. Co., 211 U. S., 210, 53 U.S. (Le. Ed.), 190 2... cece ewe ese eee eeees Pendergast v. N. ¥. Tel. Co., 262 U. S,, 43, 67 L. Quinby v. Public Service Commission, 3 A. L. R., 685, Be ee | epee ree rere terres Railroad Commission v. Eastern Texas Railroad Co., 264 U. S., 79, 68 L. Ed., 569 2.0... cece n eee eees R. R. Commission of California v. Los Angeles R. Corp., 74 L. Ed., 113 (No. 4, Adv. Opinion) ........ Railroad Company v. Gibbes Treasury, 27 S. C., 385 .. Rochester R. R. v. City of Rochester, 205 U. S., 236, 51 he Re Rr terre TRO Sry rere er Railroad Commission v. Railroad Co., 74 S. C., 80 .... Rutland Marble Co. v. Ripley, 10 Wall. (U. S.), 339, 19 ig” Ck... ager eee ere tear e st yee St. Louis & San Francisco Ry. Co. v. Gill, 156 U. S., 649, Doe Re | eee ee errr se eee ree South Bound Railway Co. v. Burton, 67 S. E., 515, 46 1 ATT iii c. Gara segs Spartanburg v. S. C. Gas & Elec. Co., 130 S. C., 125... hts Pinte Ah OBR Cask hie Shields v. Ohio, 95 U. S., 319, 24 U. S. (L. Ed.), 357 St. Louis, etc. Ry. Co. v. Berry, 113 U. S., 465, 28 U. S. i MS OS ci Ge Index of Cases Cited (Continued) vii Pace Slidell v. Crumdjean, 111 U. S., 412... ccc cecseceeeee State v. Dodge City, M. & T. Ry. Co., 53 Kan., 377, 36 Ae ae eee cine ck obbsandesbucieess | we Southern Railway Co. v. Hatchett, 174 Ky., 463, 192 . S. W., 695, L. R. A., 1917-D, 1105 ...... 6.0 0ees 46 State ex rel. Bridgeton v. Bridgeton & M. Trac. Co., 62 N. J. L., $92,458 L. R. A., 887 occ ces e eee caees 46 State ex rel. Grinsfelder v. Spokane St. Ry. Co., 19 Wash., BE EE as GO vac pa ve cWe Ure bixaeneben 46 St. Cloud Public Service Co. v. City of St. Cloud, 265 ie ROU gp | Se ee 53 Sumter Gas & Power Co. v. Sumter, 282 Fed., 931 .... 54 State, Carlton v. Dawson, 22 Ind., 272 .........0.0005 56 St. Clair County Turnpike Co. v. Illinois, 96 U. S., 63, Oe UE ek ao civ dagn de bon wa ca vbas KS 56 Southern Wis. Ry. Co. v. Madison, 59 L. Ed., 739 ..... 57 Southern Iowa Electric Co. v. Chariton, 255 U. S., 539, OD Ea Pe abd} chew aentcss \edsaiueesees se 58 ‘Tomlinson v. Jessup, 82 U. §., 454, 21 L, Ed, 204 .. 32 Texas v. Central Oil Co. (C. C. A. 8th) 914 Fed., 1, 25 Se Gh, PE a veh nc hbNh cb cde enteuwueesss 70 Texas & Pac. v. City of Marshall, 136 U. S., 393 ...... 69 Thompson v. Schenectady R. Co., 65 C. C. A., 325, 131 Pee ois tda kone sacked bho ken ebeuls geese 47 Terry v. Sou. Express Co., 141 S. E., 144 .......00055 50 Thomas v. West Jersey R. R. Co., 101 U. S., 71 ....... 51 peed Hee. See By. & Gas o., P. U. R., 1922-C., MO Gee ee iens ccep wens ss pase ¥eancaund cokes 48 Tomlinson v. Branch, 15 Wall., 460 ............00085 38 United Fuel Gas Co. v. Railroad Commission of Ky. BF Bij es Oo be Bg SOO 6 i cu edkce Soy seces + United States v. Lehigh Valley R. Co., 220 U. S., 357, SP ta: MURS s vac web vKA GAs Kae wud ce Ee eaee hawk 49 United States v. Delaware L. & W. R. Co, 238 U. S., Bal, OP ha Ts BOOS ois os bi MRWiaaeeaebeyawes oo. 49 Index of Cases Cited (Continued) Pag U. S. v. Johnston (N. Y.), 45 S. Ct., 496, 268 U. S., 220, fae, eee ey ere re ee ee Eee 71 United States v. Gleason, 175 U. S., 588, 44 L, Ed., 284 59 Sais Hanke & RR cM ARePReb aces poo SERRE ACERS 70 Union Pac. R. v. C, R. I. & P., 163 U. S., 564, 41 L. Ed., Uniee Pac R. Co. v. Chicago, R. I. & P. R. Co., 163 U. De BA G0 Es TAA Se i svaxsiicscsecasesscctecs 55 Van Hoffman vy. City of Quincy, 4 Id., 535 ........... 57 Wabash, St. Louis, etc. Ry. Co. v. Ham, 114 U. S., 587, Be i Bi oka deh aks ia ptecndho dey css 38 White v. Hart, 13 Wall., 653 .......ccccceeeeeeees 56 Whalen v. Baltimore & Ohio Ry. Co., 112 Md., 197, 12 Bi Bs Tag PE 5 1A 65508 Ce ND Pee sanc cu ane sess 56 Western Union Tel. Co. v. Pen. Co. (C. C. A.), 129 Fed., eA LAA ONS op KdSY EAEAHAN ROADS hohe 8000 66 Weld v. Gas & Elec. Light Com., 197 Mass., 556, 84 N. ee PE AA Shi oi do ekas CAN cb hss h eked £0455 00> 23 Woodhaven Gas Light Co. v. Public Service Commission of N. Y., 269 U. S., 244, 70 L. Ed., 255 ......... 24 Yazoo, etc., R. C. v. Adams, 180 U. S. L., 45 U.S. (L. gO scab U1 capdee Cheese niebugars doavess 38 viii Supreme Court of the United States OCTOBER TERM, 1929 No. 528 BROAD RIVER POWER SOMPANY, COLUMBIA RAILWAY, GAS AND ELECTRIC COMPANY, ano F. D. CAMPBELL, Perrrionsrs, versus STATE OF SOUTH CAROLINA, Ex Ret., Jonn M. Dantex, Arrornty Genera, Crry or CoLumaia, Town oF Arpen, Town or Eau Carre, Co- LuMBIA CoLLEecr, Curcora COLLEGE FOR Women, Dr. W. B. Burney, Nort Conrumara Lanp Company, THE RarLRoaD COMMISSION AND THE Co.umsBra ScHoor Boarp Joun M. Dantet, Attorney General, Corprz Pacs, Asst. Attorney General, Irvine F. Betser, C. T, Graypon, W. S. Neuson, E. W. Mutuins, H. N. Epmunps, Solicitors for Respondents. A INTRODUCTORY SUMMARY The issue in this case is whether the City of Columbia and vicinity shall be deprived of electric street railway service. _ The Columbia Railway, Gas & Electric Company (chartered . as “The Columbia Electric Street Railway, Light & Power Com. pany”) carried on the combined electric street railway, light and power business, under said charter from the date of its in- corporation in 1891, until shortly after its stock was acquired by the Broad River Power Company in 1924. In July, 1925, the companies had the old company execute a deed purporting to transfer to the Power Company all the so-called electric light and power (and gas) properties—thus taking approximately $6,000,000.00 net worth of property from the old company, without consideration, and leaving it with only the street cars and railway tracks—and thereafter, in March, 1927, abandoned — the electric railway service altogether. - The Railroad Commission (in July, 1927), and the Supreme Court of South Carolina (in July, 1929), ordered the com- | panies to restore the service. We submit that this judgment should be affirmed, upon the ra aeeteay oie’. Aedes 7 pala ma gem The Companies, which must be treated as one public service corporation, are under charter obligation to operate the service, in that the charter, especially as supplemented by the City franchise, imposes a duty on the company to operate said service, and embraces the electric railway as well as the electric light and power service, the attempted separation being merely pretensive and fictitious; hence the companies are bound to perform all the services authorized as long as they retain any of the benefits of the charter-franchise. (United Fuel Gas Com- pany v. R. R. Com. of Ky., 278 U. S., 300; 73 L. Ed, 390, and cases cited; also Sporiaxburg v. S.C. Gas & E. Co., 130 S. C., 125.) Be 4 Broap Riv. Pwr. Co., Erc., et al. v. Statgor S.C. 5 (2) The companies are bound by franchise contract with the City of Columbia to operate the service, as directed by City Council, regardless of alleged losses. (Henderson Water Power Co. v. Corp. Com. of N. C., 278 U. S., 282; 70 L. Ed., 273. Columbus R. P. & L. Co. v. Columbus, 249 U. S., 399; 63 L. Ed., 669, and cases cited. Sportanburg v. Spartanburg Gas & Elec. Co., 130 S. C., 125.) (3) The companies are bound by express contract with the various development companies providing for the continued of the service. (Franklin Tel. Co. v. Harrison, 145 U. S., 459; 36 L. Ed., 775. McKell v. C. & O. R. R., 175 Fed., 321 [C. C. A., 6th].) (4) The Street Railway service need not be operated at a loss, but could be made to yield a fair return if honestly operated, the attempt to ab-ndon the street railway service being the cul- mination of a well-designed scheme to get rid of this branch of the franchise—so as to sell securities at a better rate, and to make increased profits fron the electric light and power phase of the franchise. We submit that these positions are overwhelmingly sustained by the record and by the authorities. This case does not involve rates. It involves the bold, deter- mined, high-handed attempt of a public service corporation to abandon an entire branch of the service authorized by its char- ter—in violation of charter and contract obligations, against the protest of the State and in disregard of the Railroad Commis- sion. RR tae OE, RS mate 6 Broap Rwv. Pwr. Co., Erc., et al. u State or S. C. B STATEMENT OF FACTS (Power Company Organized in 1924 to Acquire Colum- bia Railway, Gas & Electric Company and Then Aban- don Street Railway Service.) The Broad River Power Company was organized in 1924 for the purpose of acquiring and holding the stock in the Columbia Railway, Gas & Electric Company (R., 837), (Ex. 27), which had operated the combined electric street railway, light and power business in the City of Columbia, S. C., and vicinity, under State and City franchise, since 1891 (R., 873), (Ex. 27). This purpose was accomplished by the General Gas & Electric Company of New York, which had acquired the stock in the Columbia Railway, Gas & Electric Company, contributing said Columbia Railway, Gas & Electric Company stock as a capital stock contribution to the Broad River Power Company, and receiving in exchange therefor stock in the Power Com- pany (R., 672-676). During this period (1923-1924) the annual operating reve- nue attributed to the so-called “Electric Department” (about $1,- 000,000.00), in statements published by the Broad River Power Company, was approximately four times the operating expenses (about $250,000.00) for such department (Ex. A-25, R., 1122). After this period the companies had the same officers from President on down through bookkeeper, and also the same of- fices in the City of Columbia and in the City of New York (R., 1049-1057), (Ex. 6-7-8-9, McF.). The Broad River Power Company then undertook to separate the electric street railway branch of the business by having the Columbia Railway, Gas & Electric Company transfer to the Broad River Power Company, in July, 1925, without valuable consideration (R., 418, 634-635), all the so-called electric light and power (and gas) properties, having a net equity in ap praised value of approximately $6,000,000.00, thus leaving a Broap Riv. Pwr. Co., Erc., et al. v. Statzor S.C. 7 only the street cars and tracks in the name of the Columbia Railway, Gas & Electric Company (R., 1070-1118), (Ex. A-11). This transfer purported to have been made in pursu- ance of the so-called Merger Act, which was passed in March of the 1925 session of the South Carolina Legslature, at the instance of the companies, for the ostensible purpose of au- thorizing the Columbia Railway, Gas & Electric Company and its subsidiaries to merge into the Broad River Power Com- pany (R., 806). Thereafter the Broad River Power Company claims to have advanced operating funds to the Columbia Rail- way, Gas & Electric Company, without security (R., 398, 1024). After this the Columbia Railway, Gas & Electric Company in March, 1927, ceased electric street railway service altogether, later advancing upon the plea of lack of funds (R., 1048), and excessive competition from jitneys and buses (R., 21, 1048). It was afterwards discovered that the Broad River Power Company had during this period contributed at least $19,000- .00 in cash to the supposedly competing bus company (R., 408, 776-778). During the progress of this suit the appellant companies had the Columbia Railway, Gas & Electric Company file a voluntary petition in bankruptcy, listing its assets at $50,444.09, and its liabilities at $3,267,978.75, and obtained a temporary stay or- der against the prosecution of this suit (R., 101). The District Court, and also the Circuit Court of Appeals of the Fourth Circuit, ruled that the company had no right to go into bank- ruptcy, and revoked the temporary stay order. (See 25 F. [2nd] 329, and 27 F. [2nd] 52.) Under these circumstances it was found and ruled by the South Carolina R. R. Commission, by the Special Referee, and also by the South Carolina Supreme Court, that the Columbia Railway, Gas & Electric Company had been converted into a mere instrumentality or agency of the Broad River Power Com- pany, and that the two corporations, for the purposes of this case, must be treated as having been merged into one public service corporation. | EERE Re ST sa tae 8 Broap Rw. Pwr. Co., Erc., et al. vu Stare or S. C. (Columbia Railway, Gas & Electric Company Oran- oe ized in 1891 to Carty on Electric Street Railway, Light and Power Business.) ; The Columbia Railway, Gas & Electric Company was created by Special act of the South Carolina Legislature, dated De- cember 16, 1891, under the name of Columbia Electric Street Railway, Light & Power Company (R., 809), the name being thereafter changed by amendment in 1911 to Columbia Rail- way, Gas & Electric Company (R., 15, F., 20). This act authorized the company, as its name implied, to carry on the electric street railway, electric light, electric power (and gas) business in the City of Columbia and vicinity (R., 809). These powers in part had formerly been conferred upon different companies for various periods, but this act authorized the consolidation of two of these companies and the purchase of the other, and conferred upon the one company for a period of fifty years all these powers which had formerly been granted to the several companies (R., 809-819). The powers thus acquired by the Columbia Electric Street Railway, Light & Power Company included the powers (for- merly conferred upon the Congaree Gas & Electric Company) to make, manufacture, sell and distribute electricity (and gas) and to erect the necessary poles and wires and other equipment therefor (R., 813-817) ; also the powers (formerly conferred upon the Columbia Electric Street and Suburban Railway and Electric Power Company) to operate electric street railway service in the City of Columbia and vicinity with electric power, with consent of Columbia City Council, and to provide or con- tract for electric power for any and all purposes (R., 811-813). The power to carry on the electric street railway and power branch of its operations was conditioned, among other things, upon the company’s commencing operations within five years and upon obtaining the consent of Columbia City Council (R., 812). This consent was obtained under ordinances expressly | providing it should be the duty of the company to run their cars daily and/or as required by City Council (R., 835). Broap Riv. Pwr. Co., Erc., et al. v. Stateor S.C. 9 The original authorized capital stock of the company was __ * $75,000.00, and the duration of the charter granted by this act was fifty years. The company duly accepted the charter, effected the con- solidation and the purchase authorized, and commenced its operations thereunder, and the old companies ceased to exist (Ex. 10, p. 13). Under this charter the company acquired and constructed electric power plants and sub-stations, electric street railway lines, electric poles and wires and rights-of-way (R., 653-656), always using the electric poles and wires and rights- of-way in connection with the electric light and power business as well as for the electric street railway service (R., 300-372, 405-406), and generally developed and conducted its electric street railway, light and power business as one public utility business, up to the time of the alleged separation above men- tioned (R., 17, 489-510). The company also increased its capi- tal stock under this charter from time to time—$500,000.00 in 1899; $1,600,000.00 in 1905, and to $3,000,000.00 in 1911 (that is, twenty thousand shares of common, $2,000,000, and one thousand shares of preferred $1,000,000) (Ex. 10). Throughout this period and down to the alleged separation above referred to, the income from all sources of the com- panies’ operations was carried in a common fund, and all ex- penditures were made from this common fund (R., 654-656). It is now impossible to ascertain whether the companies’ power plants and electric system were constructed more from the pro- ceeds of the so-called electric railway department or from the so-called electric department (R., 656). The consolidated company was also . ranted the right by special act of the South Carolina Legislature to construct and maintain a dam across the Congaree River near the confluence of the Broad and Saluda Rivers at Columbia (S. C. Stat. 1912, p. 779, Ex. 10, p. 55). Exhibit 10, which is the report on the Columbia Railway, Gas & Electric Company, prepared by the counsel for the purchasers in 1924, particularly called attention at page 10 under the gen- eral discussion of “Primary Franchise” to the ordinance pro- viding the obligation to run the cars. ~- 10 Broap Riv. Pwr. Co., Erc., et al. v. State or §. C. Since the Act of 1891, there has been no other public utility operating in this community. Hence, it is our contention—and it was so found by the South Carolina Supreme Court and also by the South Carolina Rail- road Commission—that the charter, especially when taken in connection with city ordinances and development company con- tracts, imposes a positive duty to operate the electric railway service, and also that, under the charter, and in view of the operation and development of the system, the electric railway is inseparably linked with the electric light and power phases of the franchise. (Franchise For Operation in Columbia Obtained Under Ordinances Specifically Requiring Daily Operation.) The fifty (50) year state charter as above explained required the consent of Columbia City Council, as a condition for the op- eration of the electric street railway service. The Company, by its president, filed a written application on September 13, 1892, asking for such consent (R., 832-833), and submitted an ordi- nance to accomplish that purpose. City Council granted the petition and by ordinance dated October 11, 1892, prescribed the terms upon which such consent was given. This ordinance complete is embodied in the Record in Section 561 (old Section 360), Section 562 (old Section 361), p. 838, and Section 565 (old Section 362), p. 840. This ordinance in effect reapplied the old ordinances regu- lating the Columbia Street Railway Company (Section 360), and authorized the use of electricity as motive power (Section 361) and the erecting of poles and the hanging of wires thereon, and expressly reserved to the City Council “the right to regulate by ordinance the manner of operating said electric railway . . . by such further enactments as by their judgments the public welfare may demand.” (Section 362, p. 840.) The ordinances which were thus reapplied for the Columbia Electric Street Railway, Light and Power Company, provided for the laying of the tracks and the paving as directed by City oe Council (Section 560 [old Section 349]), and also “that it should be the duty of the Company on week days to run a cat” Broap Riv. Pwr. Co., Erc., et al. v. State or S.C. 11 for: at least every hour from 7 A. M. to 9 P. M.” - (Section 553 [old Section 352], R., 835), and specially pre- scribed a “Penalty for Failure to Run” “if the said company should neglect or refuse to run their passenger cars as herein . « .” (Section 555 [old Section 354], R., 836), and also reserved the right of amendment of the ordinance to City Council (Section 560 [old Section 359], R., 837). - From time to time thereafter various ordinances were enacted by City Council regulating the operation of the street railway service, some being according to our view of a police nature and some of a contractual character (R., 839-845). Under these ordinances, many of which are set forth in the record on pages 830 to 845, the Company constructed and operated its electric railway tracks, together with the electric poles and wires comprising its electric street railway system (R., 490-492). The poles and wires constructed and acquired under this franchise, and used in connecton wth the electric street railway operations, are now being used by the Broad River Power Company in connection with its electric light and power business (R., 405-406, 396). The last ordinance apparently granting to the company the right to lay tracks on the City streets was enacted on the 23rd day of August, 1921 (R., 845). This ordinance, as was the case with all prior ordinances of the same character, contained the provision : “Provided further that the above privileges are upon the express condition that the said company shall comply with all the rules, regulations and ordinances of the City of Columbia, now of force or hereafter to be enacted, relating to the con- struction of street railways and the operation of the same” (R., 845). ‘On January 24, 1928, during the progress of this suit, Co- lumbia City Council passed an amendatory ordinance directing the companies to run their cars on all their lines leading into and from the City of Columbia at least on a thirty minute schedule from 6 A. M. to 11 P. M. daily, and to institute and maintain the said schedule in constant operation (R., 849-850). - It is our contention and it was so found by the S. C. Supreme Court; that these ordinances and the operation under them. by 42 Broap Rwv. Pwr. Co., Erc., et al. vu. State or S.C. the Company, particularly when coupled with the provisions of the state charter, constitute a supplementary and secondary franchise contract with the City of Columbia specifically re- quiring the operation of the electric railway service, at least for the fifty year charter life of the company, regardless of alleged losses. sities (Electric Railway System Extended under Contracts with Development Companies Providing for Continued Operation. ) In the extension and development of its electric railway, light and power business, which occurred coincidentally with the growth of the community, the Company acquired various suburban lines and rights-of-way, and entered into various contracts with land development companies requiring opera- tion of the electric railway service. In 1900 the Company acquired the line of railway with its rights-of-way, privileges and appurtenances which had been constructed about 1896 by the Columbia and Eau Claire Elec- tric Railway Company to serve the adjacent communities of Hyatts Park and Eau Claire (R., 297, 848). In 1902 the Com- pany leased from the Columbia Land and Investment Company a line of electric railway, constructed into the village of Shan- don, for a period of 99 years from date. This lease provided, among other things, that the Company would “during said period continuously operate said line of railway by running at least one car per hour each way over the same between 7 :30 a. m. to 8 p. m. daily” (R., 864-868). The Company afterwards acquired this tract of land in fee by deed executed in pursuance of said lease. In 1906 the Company entered into a contract with the North Columbia Land Company for the acquisition of a line which had been constructed by the Hyatt Improvement Company, and for the construction and maintenance of a proposed exten- sion to said line. This contract provided that after such convey- ance and construction the Company would “thenceforth main-— tain and keep it in good condition and repair and run and operate street railway cars over the said line and extension connection with its lines of street railway in and near the said S BRroap Rrv. Pwr. Co., Erc., et al. v. Stavtor S.C. 13 City of Columbia on convenient and reasonable schedules of got less than one car for every hour from eight o’clock in the - mofning to eight o'clock at night, and as much later and oftener:as travel will warrant of each day . . .” (R., 851- 854). A subsequent similar contract was entered into with the Shandon Annex Company May 30, 1910 (R., 855-857). In re- liance upon this contract and agreement Dr. W. B. Burney gave the right-of-way through his property and contributed $6,000 in cash to the expenses of the construction of the line (R., 858-860). In 1912 also the Company acquired the line of electric rail- way, together with all franchises, righ‘s-of-way, and appurte- nances, which had been constructed by the Suburban Transit Company into the community then known as Colonial Heights, now a part of the village of Eau Claire (R., 869-870). This Suburban Transit Company line had been constructed and oper- ated in connection with the sale and development of the said community by the Suburban Homes Company, which had sold the lots under guarantee to furnish electric railway transporta- tion (R., 353-363). The Suburban Transit Company had also obtained a special grant from the City of Columbia under ordi- nances providing among other things that “in consideration of the privileges and franchises herein granted, the Suburban Transit Company hereby covenants and agrees to conform to all the regulations and ordinances of the City of Columbia” (R., 840-842). All these various lines of electric railway were operated by the company from the dates of their acquisition as parts and parcel of their one system, the charter having authorized the extension of the lines “five miles into the country.” The rights of-way and poles have always been used and are now being used for carrying the electricity sold for light and power, as well as for the operation of the electric railway system. Practically all of the surrounding communities of the City of Columbia were built up along these lines of electric railway and are dependent thereon for public transportation. Much of the property in these communities was bought and sold in ee reliance upon the continuance of the electric railway service in 14 Broap Rw. Pwr. Co., Erc., et al. v. State or S.C. accordance with the contracts above mentioned. (See Test. — C. M. Scott, R., 309-321; Mrs. S. Y. Riddle, R., 336-341; W. M. Addison, R., 353-363; W. F. Cleveland, R., 372-380; W. M. Mason, R., 382.) tt The Columbia College and Chicora College for Women chose college sites relying upon the continuance of the electric railway service under these contracts. (Test. of E. O. Watson, R., 346 and Dr. S. C. Byrd, R., 321.) It is our position, and it was so found by the South Carolina Supreme Court, that these contracts, having been made in pur- suance of its charter purposes, were intended for the benefit of the public, were relied upon by the public, are valid and subsist- ing and enforceable in this proceeding. Company’s General Business Profitable, but Electric Railway Service Neglected. The company’s public business as a whole has always been successful (See Exhibits A-28, A-25, R., 1122, A-41, R, 1126). “The net earnings” of the company (that is, as we under- stand, the net operating earnings) during the last few years of operation of the combined electric street railway, light and power (and gas) service, as stated in Broad River Power Company advertisements for the sale of its bonds (Exhibits 27-30, 14-16 McF.) were as follows: Year ending June 30, 1923 .........+- $661,501.00 Year ending June 30, 1924 .......-.+> 759,516.00 Year ending Dec. 31, 1924 ........-+- 876,382.00 Year ending Dec. 31, 1925 ......++++s 937,740.00 At the time of the so-called transfer and separation berein- above mentioned, that is, in July, 1925, the appraised value of the property sought to be transferred amounted to $11,406,- 723.43 against which the liabilities amounted to $7,053,211.88, thus leaving a net equity in the property of $4,353,511.55 (R., 635). Also the franchises were valued at $1,561,000.0, | thus making the total equity in the assets so attempted tobe conveyed $5,914,511.55 (R., 635). For this equity no : able consideration was paid (R., 418, 635). Broa Rw. Pwr. Co., Erc., et al. v. State or S.C. 15 After this transfer the Columbia Railway Gas & Electric _ Company was left with total current assets amounting to $75,- 145.00, with current liabilities of $99,224.48, thus leaving a net deficiency of $24,078.56 (See Ex. A-26, R., 1123). _ Following the deflation of 1920-1921 the Columbia Rail- way, Gas & Electric Company had a strike in 1922 of its motormen and conductors (R., 731). After this strike the company allowed its system to be seriously undermaintained (R., 735), and the gross income attributed to the service immediately decreased by approximately one-half (R., 732). The record contains no evidence that the company made any _ effort to conciliate its workmen or the people who largely patron- ized the service (See R., 731-732). After the so-called transfer and separation above mentioned the companies began an active campaign to abandon the electric railway service. While the companies were complaining to the Railroad Com- mission that it was impossible to operate the service success- fully, on account of the jitney and bus competion their of- ficers were at the same time encouraging the citizens of the adjacent communities of Colonial Heights and Eau Claire to allow the bus company to enter (R., 356-7), and also actually contributed cash amounting to at least $19,000.00 to the oper- ating expenses of the supposedly competing bus company (R., 774-781). The company was also declining to receive patro- nage offered (R., 363-365) and charging electric power to the so-called railway department at a rate of 36 2/3% higher than the rate charged to other power customers (R., 624). The effect of these causes is shown by the following state- ment of the gross income of the so-called railway department taken from the companies’ ee ene: (Ex. A-19, J. W. W.). 16 Broap Rwv. Pwr. Co., Erc., et al. v. State or S. C. Year Income DO se vic ds Hine G aed SHS $158,000.00 MODE ii5 eek Seika a en Bas gen woken eh 100,000.00 Throughout this period the income attributed to the so- called electric department steadily and rapidly decreased (R., 872) (Ex. 29). The population of the City of Columbia has increased from approximately ten or fifteen thousand in 1890 (R., 508) to something over fifty thousand (50,000) at the present time in the City proper with a total population of some- thing over seventy thousand (70,000) in the territory which would be served by the street railway system. During the years 1923 and 1924 the operating revenue attributed to the so-called electric department as compared with the operating expenses was as follows (Ex. A-25, R., 1122): 1923 , 1924 Operating revenue ........-- $955,734.00 $1, 139,678.00 expenses ........:: 249,252.00 253,092.00 No part of the income derived from the fixed assets belong- ing to the company was credited to the so-called “railway de- After the so-called separation the Broad River Power Com- pany charged the Columbia Railway Gas & Electric Company not only for power consumed but also for “pole rental,” that is, for the use of the poles which had formerly been constructed for the benefit of the electric railway service (R., 396). But no credit was given to the Railway Department for the $6,000,- 000.00 net worth of property which the Broad River Power Company had taken from the Columbia Railway, Gas & Elec- tric Company without consideration (Ex. A-12-19, R., 1118 1119). Mr. J. P. Campbell, Treasurer of the companies, also testi- fied that from the very outset they determined to eliminate the street railway branch of the service, if they found they could not operate it at a profit, “if it were possible to do 30” (R., 678-679). After this alleged separation the Broad River Power Com- pany claims to have advanced op~..iting funds totalling ap proximately $115,000.00 to the Columbia Railway, Gas & Broap Rv. Pwr. Co., Erc., et al. v. Srare or S. Cc FF Electric Company (R., 1024) for power and other expenses. _ "These advances were made apparently by exchange of checks but were simply charges on the books and no evidence of the indebtedness or due date or rate of interest was agreed upon or fixed as between the companies (R., 398, 414, 1024). The “net earnings” attributed to the Broad River Power Company, as shown by its statements published in connection with the sale of its bonds, covering largely the period since the so-called separation were as follows (See Exhibits 29, 31, A., 10, R., 1070): Year ending March 31, 1926 Year ending August 31, 1926 Year ending December 31, 1927 Throughout the period during which the company claims to have sustained operating losses on the so-called Railway Department the company’s own statements, as published, upon analysis show that the earnings have been amply sufficient to pay handsome dividends on the stock. The balance available (after paying operating and mainte- nance expenses, taxes and interest) for the years 1920 and 1921 (See Ex. A-29 J. W. W. and A-30 J. W. W.) and for the years 1922, 1923 and 1924 (Ex. 27) ; for the Columbia Rail- way, Gas & Electric Company, and the dividends actually paid and surplus set aside by the Broad River Power Company in 1925-1926 (Ex. A-41 J. W. W.) were as follows: $ 121,159.16 236,028.36 215,072.00 364,403.00 1924 (June 30th) 418,751.00 1925 (Dividends—Common and Preferred) .. 334,545.00 1926 (Dividends—Common and Preferred) .. 349,682.00 $ 2,667,043.11 Based upon the foregoing facts and upon the Record herein it is our contention, and it was so found by the South Carolina Supreme Court and by the Railroad Commission, that the Elec- 18 Broap Rw. Pwr Co. Erc., etal. vu. Srateor S.C tric Railway service in itself could with proper management be made to yield a fair return, but that the companies have sought to separate and abandon that branch of its service for the rea- son that the same is relatively more troublesome and less profit- able, and at the same time to retain the extraordinarily easy and profitable electric light and power phases of its franchise. REVIEW OF LEGAL PROCEEDINGS The Company ceased the electric railway operations on March 11, 1927. This action was taken without making any application to the Railroad Commission or to any public body whatsoever (R., 413). The Railroad Commission after several hearings handed down an order on July 28, 1927, directing the restoration of service. The Commission found among other things that the alleged separation and transfer was an act of bad faith and invalid, and that the companies had not made an honest effort to operate the electric railway service (R., 930-831). No petition for a rehearing from this final order of the Railroad Commission was ever filed by the Companies, as re- quired by the South Carolina Act regulating the procedure be- fore the public utility commission. (See S. C. Acts of 1922, p. 938.) The Columbia Railway, Gas & Electric Company, however, instituted a suit in the United States District Court for the Eastern District of South Carolina for an injunction against the enforcement of the Railroad Commission’s order and for a temporary restraining order. The temporary restrain- ing order sought was refused by Judge Cochran, upon the ground among others that the Company had failed to make the application for rehearing as required by this Act. (See Co- lumbia Railway, Gas & Electric Company v. Blease, et al. [U. S. D. C. E. D. S. C., 1927].) This case was commenced on July 19, 1927. After certain motions and demurrers had been argued at the October, 1927, term of the Supreme Court, an order of reference was made by the Court on January 11, 1928, and the referee fixed Jan- uary 25, 1928, for the first reference. ) ‘Broa Riv. Pwr. Co., Erc., et al. v. State or §.C. 19 On January 24, 1928, the Columbia Railway, Gas & Electric ~ Company, as hereinbefore stated, attempted to go into volun- tary bankruptcy and obtained a temporary stay order against this suit. The Broad River Power Company likewise appeared and joined in the relief prayed for by the attempted bankrupt. Among the liabilities listed were “contracts to operate with the North Columbia Land Company, Columbia Land and Invest- ment Company and Shandon Annex Company.” These attempts were finally defeated by the decision of the District Court (25 F. (2nd), 329), which was subsequently affirmed by the Circuit Court of Appeals of the Fourth Circuit rendered in June, 1928 (27 F. (2nd), 52), to which we earnestly invite the attention of this Court as admirably stating the duties and functions of this public service corporation. The evidence was then taken, the case was argued at the Oc- tober, 1928, term, the Court handed down its decision on July 9, 1929, ordering the restoration of service upon the grounds hereinbefore stated in the Introductory Summary. A petition for rehearing filed by the companies was dismissed on Septem- ber 25, 1929. It was not held by the Supreme Court, and it is not contended by us—as is suggested by petitioners—that the usual permis- sive charter alone, of an insolvent railroad or street railway company, requires continued operation at a loss. We submit, however, that we have no such situation in this case. We have here a solvent, prosperous, corporation, chartered as an electric street railway, light and power company, and bound by charter and contract obligations to operate its electric railway service, seeking to evade the more troublesome but to keep the more profitable phases of its business. a 20 Broan Riv. Pwr. Co., Erc., et al. v. STATE OF co > c ARGUMENT We will discuss the legal questions involved herein in the following order : . I. Charter Franchise Obligation to Operate, Arising from Retaining Benefits of Charter. II. The Obligation to Operate Created by the City Ordi- nances. III. The Obligation under the Development Company Con- tracts. IV. The Question of the Necessity of Operation at a Loss, While we discuss these grounds separately they should all be considered together. Any one is sufficient to sustain the judg- ment, but they should also be considered as mutually supple- mentary. We are attaching hereto in the Appendix the companies’ charter franchise, granted by the Act of 1891 and supplemented by the City ordinances and other contracts, as we conceive it should be construed. : _ Broap Riv. Pwr. Co., Erc., et al. v. Sratz or S.C. 21 The Act of 1891 conferred not only (1) the right to be a corporation, but (2) also the right to do the things therein au- thorized, that is, to carry on the Electric-street-railway-light- and-power (and gas) business for a period of fifty years. That is, it conferred a franchise both (1) to be a corporation, and also (2) to carry on these public services, Of course this was, in effect, the creation de novo of a new corporation deriving all its powers and franchises from this Act. (12 R. C. L., 220; 7 R. C. L., 1770; Atlantic & Gulf R. R. Co. v. State of Georgia, 98 U. S., 359; 25 L. Ed., 185; Rochester R. R. v. City of Rochester, 205 U. S., 236; 51 L. Ed., 784; Railroad Company v. Gibbes Treasury, 27 S. C., 385 ; Interstate Consol. St. R. Co. v. Massachusetts, 52 L., Ed., 111.) This Act was not in any sense “the usual permissive charter of a Railroad Company” referred to in the T'exas case (264 U. S., 79), and the other cases (254 U. S., 513, 65 L. Ed., 380), relied upon by appellants. It was an act of incorporation. It was a franchise to carry on the electric street railway, light and power (and gas) business. It was a franchise to Operate an electric street railway service in the City of Columbia and vi- cinity in connection with such business. It bore an intimate re- lationship to the City of Columbia (which was the State’s capital city), and was subject to the ordinances enacted by City Council, which expressly imposed tie duty on the company to operate the electric railway service. (Public Service Corporations Bound to Perform Serv- ices Authorized as Long as Charter Retained. ) _ The principle that a public service corporation is bound, if required by the State, to perform all the public services au- thorized by its charter franchise, as long as it retains any of the benefits of said franchise, is well established and recog-_ nized by all the authorities, 22 Broap Riv. Pwr. Co., Erc., et al. v. State or S. C. See United Fuel Gas Co. v. R. R. Com. of Ky., 278 U. S,, 300, 73 L. Ed., 390, and cases cited. 26 C. J., 1014; 14 C. J., 110; 12 R. C. L., 199-200; Me. Candless vu. R. R. Co., 38 S. C., 103; Harmon v. Cola. & Greenville R. R. Co., 28 S. C., 401; C. & O. R. R. Co. v. Pub, Serv. Com., 242 U. S., 603. 61 L. Ed., 603. “The primary duty of a public utility is to serve on reasonable terms all those who desire the service it ren- ders. This duty does not permit it to pick and choose and to serve only those portions of the territory which it finds most profitable, leaving the remainder to get along with- out the service which it alone is in a position to give.” United Fuel Gas Company v. Railroad Commission of Ky., 278 U. S., 300, 73 L. Ed., 390. “This duty,” said the United States Supreme Court in Chesapeake & O, R. R. Co. v. Public Service Commission, 242 U. S., 603, 61 L. Ed., 603, “arises out of the acceptance and enjoyment of the powers and privileges granted by the state, and endures so long as they are retained. It represents a part of what the company undertakes to do in return for them, and its performance cannot be avoided merely because it will be attended by some pecu- niary loss . . .” (Pages 522-523.) “When a railroad company accepts a charter,” as our own Court said in the case of Harmon v. Columbia & Greenville Railroad Co., 28 S. C., 401, “it assumes the performance of all the duties to the public which are imposed upon it by the charter or the general laws of the State. . . . It cannot be permitted to enjoy the benefits conferred by its char- ter without incurring the responsibilities incident there- to” (page 404). “Such companies,” as was said by this Court in Gibbes v. Con- solidated Gas Co., 130 U. S., 396, 32 L. Ed., 979 and 985, “entered the streets . . . , under their charters, in the ex- ercise of the equivalent of the power of eminent domain, and are to be held as having assumed an obligation to fulfill the public purposes to subserve which they were incor: _ porated.” 2 ‘Broap Riv. Pwr. Co., Erc., et al. v. Strate or S.C. 23 “A public service corporation, by accepting the rights and privileges conferred by its act of incorporation and by entering into the enjoyment of its franchises, undertakes to perform all the public duties required of it. . . .” Weld v. Gas & Elec. Light Com., 197 Mass., 556, 84 N. E., 101, quoted in Attorney General v. Haverhill Gas Light Co., 215 Mass., 394, Ann. Cas., 1914-C., 1266. The principle really involved in this case is that a public service corporation may be required to perform or maintain a service embraced within its charter, even at a loss if need be, as long as it retains any of the benefits of the cha. ver. (245 U. S., 345; 62 L. Ed., 337; 269 U. S., 244, 70 L. Ed., 255; 216 U. S., 262, 54 L. Ed., 472; 206 U. S., 1, 51 L. Ed., 933.) It does not question the principle that an insolvent railroad com- pany with a purely permissive charter, when it can only operate at a continued loss, and when it has entirely given up its charter rights, cannot be required to continue operation—which prin- ciple so strenuously contended for by appellants, is cheerfully conceded by us. This concession fully explains all the cases chiefly relied on by appellants where abandonment was really allowed. (The Texas case, 254 U. S., 79, 68 L. Ed, ——, Jack v. Williams, 145 Fed., 281; Charleston ‘Isle of Palms Tr. Co. v. Shealy, 266 Fed., 406.) We are not unmindful of the decision in the Brooks-Scanlon case, 251 U. S., 396, 64 L. Ed., 323, but that case did not involve a public service cor- poration. This of course makes a vital difference. Where how- ever a public service corporation retains the benefits of its franchise, it is uniformly held that it may be compelled to per- form, the question of profit or loss being referred to its opera- tions, as a whole. This principle is illustrated by the following among innu- merable other cases : United Fuel Gas Company v. Railroad Commission of Ky., 278 U. S., 300, 73 L. Ed., 390; New York ex rel. New York & Queens Gas Co. v. McCall, et al. (Public Service Commis- 24 Broap Riv. Pwr. Co., Erc., et al. vu. Stare or S. C. sion of the State of N. Y.), 245 U. S., 345, 62 L. Ed., 337; Missouri Pac. R. R. Co. v. Kansas, 216 VU. S., 262, 54 L. Ed., 472; A. C. L. R. Co. v. North Carolina Corp. Commission, 206 U. S., 1, 51 L. Ed., 933; Woodhaven Gas Light Co. v. © Public Service Commission of N. Y., 269 U. S., 244, 70 L. Ed., 255; Puget Sound Traction, Light & Power Co. v. Reynolds, 244 U. S., 574, 61 L. Ed., 1325; St. Lowis & San Francisco Ry. Co. v. Gill, 156 U. S., 649, 39 L. Ed., 567; Fort Smith Light & T. Co. v. Bourland, 267 U. S., 330, 69 L, Ed., 631; Milwaukee Electric Ry. & Light Co. v. State of Wisconsin, 252 U. S., 100; 64 L. Ed., 476; Chesapeake & 0. R. Co. v. Public Serv. Com., 242 U. S., 603; 61 L. Ed., 520: Brownell, et al. v. Old Colony R. R. Co. (Mass.), 29 L. R. A, 169; Gibbes v. Consolidated Gas Company, 130 U. S., 396, 32 L. Ed., 979; Attorney General, ex rel. Corporation Com. v. Haverhill Gas Light Co., 215 Mass., 394, Annotated cases 1914-C, p. 1266; Harmon uv. Columbia & Greenville R. R. Co., 28 S. C., 401; McCandliss v. R. R. Co., 38 S. C., 103; Spar- tanburg v. S.C. Gas & E. Co., 130 S. C., 125, In the above cited United Fuel Gas Company case, 278 U. S., 300; 73 L. Ed., 390, the appelant company was a West Virginia corporation, which also did a gas business in the State of Ken- tucky. After an order had been passed by the Railroad Com- mission of Kentucky reducing the previous prevailing rates in certain cities in Kentucky to 80% of the former rate, the com- pany then organized a subsidiary company in Kentucky known as the Warfield Company, which thereafter petitioned the com- mission to permit higher rates or in the alternative to permit it to withdraw such service from these cities. The Commission denied the petition, and the District Court affirmed the action of the Commission. It was claimed by the company that this required it to operate at a loss and deprived it of its property without due process. This Court held that the Company could lawfully be required to continue to perform the public service in question as long as it continued to do business in the State. “The primary duty of a public utility,” said the Court, “is to serve on reasonable terms all those who desire the service Broap Ruv. Pwr. Co., Erc., et al. v. Stare or S.C. 25 ‘it renders. This duty does not permit it to pick and choose and to serve only those portions of the territory which it finds most profitable, leaving the remainder to get along without the service which it alone is in a position to give.” . . . and if a public service company may not refuse to serve a territory where the return is reasonable, or even in some circumstances where the return is inadequate, but that on its total related business is sufficient (Atlantic Coast Line R. Co. v. North Carolina Corp. Com., supra, at p. 25 (51 L. Ed., 944; 27 Sup. Ct. Rep., 585; 11 Ann. Cas., 398). Missouri P. R. Co. v. Kansas, supra, at p. 277 (54 L. Ed., 478; 30 Sup. Ct. Rep., 330), it goes without saying that it may not use its privileged position, in conjunction with the demand which it has created, as a weapon to control rates by threatening to discontinue that part of its service if it does not receive the rate demanded. The powers of the state, so far as the Federal Constitution is concerned, were not exceeded by the action of the commission, in compelling appellants to continue their serv- ice in the cities named so long as they continued to do business in other parts of the state, and to there avail of the extraordinary privileges extended to public utilities” (p. 396). In this case the Court also held that in calculating the rate to be allowed, the regulated gas business should be credited with 50% of the proceeds of the sale of the gasoline extracted in the earlier stages of its production, though the company had organized a subsidiary company to handle such gasoline and had reserved for itself only one-eighth of the profits from the gasoline end of the business. This ruling was based upon the ground that there was a joint use made of the prop- erty of the company in the production of the different phases of its operation, and that consequently the profits therefrom must be fairly prorated. “In the production of this gasoline. therefore, joint use is made of the gas, gas field and certain facilities of the gas company. This joint use requires a pro- rating of joint investment and expenses, and of the re- turn from the enterprise” (page 400-401). This case is important not only as showing the obligation of a public service company to continue its service, but as showing 26 Broap Rw. Pwr. Co., Erc., et al. uv. State or S, C. the duty of such a company to prorate the income to the various branches of its operation from property jointly used for such branches, ’ The principles of the foregoing cases were applied by the South Carolina Supreme Court in the case of Spartanburg v. S. C. Gas & Electric Company, 130 S. C., 125, the case which in principle is on all fours with the case at bar. In that case the company was denied the right to abandon the electric railway ‘service because the franchise to carry on the several services had been originally granted by one ordinance. The ordinance conferring the franchise in that case was in all essential respects identical with the State charter (particu- lariy when supplemented by the Columbia City ordinances) con- ferring the franchise in the case at bar. The ordinance in Section 1 conferred the right “to construct, maintain and operate a street railway” in Spartanburg and “to operate the same by electricity . . ., including erection and building of poles sad: wired ie the street,” and in Section 12 also granted “the right and authority to lay, construct, erect, maintain and oper- ate, pipes, poles and wires through . . . the streets of the City of Spartanburg for the purpose of supplying light, power and heat through the nieans of electricity, gas, or either of them, to the public . . .,” and in Section 15 provided that the duration of the grant “should continue for the period of forty years from the date hereof.” (Rates were apparently also pro- vided for in the said ordinance and an acceptance was required, but for the purposes of this question these facts appear to us to be entirely immaterial. ) In that case the Company undertook to abandon the electric railway service alone on account of alleged losses extending over the period of years from 1918 through 1922 amounting to ritarly $400,000.00. — The Supreme Court of South Carolina notwithstanding issued the writ of mandamus directing the resumption of service, bass ing its decision upon the inseparability of the electric railway _ from the electric light and power franchise, arising both from the contract and also from the physical connection of branches of the service. Broap Riv. Pwr. Co., Erc., et al. v. Starz or S.C. 27 will be observed,” said the Court, “that three businesses im its contract. Whatever may be said about the separateness of the gas franchise, the electric light and power business is linked to its electric railway business. The respondent admtis that its electric light and power franchise is valuable and it is a paying business. “If the street railway does not pay with all the advantages it derives from its electric light and power adjunct, then an elec- tric railway alone must fall. It is inevitable that Spartanburg must be without a street railway, if the respondent be allowed to keep the one and destroy the other. They stand or fall together as an entire contract. It could not be held that if A makes a con- tract to buy from B a certain tract of land of 100 acres, at $100.00 per acre, A could force B to reserve 10 acres of bone and pay him only $9,000.00 for the 90 acres of good land. The contract is one transaction, and the $1,000.00 paid for the 10 acres of worthless land is not confiscation. The 10 acres may be separated from the 90 acres, but the railway and power busi- ness cannot be separated” (pp. 129-130). We earnestly submit that the reasoning of that case is en- tirely sound and should be adopted by this Court as it was in the instant case by the South Carolina Supreme Court. This decision of the Supreme Court of South Carolina is entitled to peculiar weight in this case. It was evidently in view of this decision that the appellant companies, which also ac- quired the Spartanburg properties there involved (R., 408), undertook to effect a separation of the electric railway from the electric light and power business in this case. The writ of error in this Spartanburg case was dismissed by the United States Supreme Court on the company’s motion on November 20, 1924. (See 266 U. S., 639; 69 L. Ed., 482.) The same principle was applied in the other cases cited above in the Chesapeake & O. R. Co. case, supra, in which an order of the commission requiring the company to install and maintain _ @ passenger service on the branch line was sustained, notwith- standing the operation of such line would result in a loss, 28 Broap Rwv. Pwr. Co., Erc., et al. vu. State oF S. C. In the Atlantic Coast Line case, supra, which is one of the _ leading cases on this subject, this Court upheld the power of the Commission to order the company to put on and maintain a train so as to make connections with the Southern Railway at Selma, notwithstanding it was conceded that the operation ef such connecting train in itself would necessitate a daily loss, “That power as we have seen,” said the Court, “takes its origin from the quasi public nature of the business in which the carrier is engaged, and embraces that business in its entirety “This is so because, as the primal duty of a carrier is to fur- nish adequate facilities to the public, that duty may well be com- pelled, although, by doing so, as an incident some pecuniary loss from rendering such service may result . .. . As the duty to furnish necessary facilities is coterminous with the powers of the corporation, the obligation to discharge that duty must be considered in connection with the nature and productiveness of the corporate business as a whole, the charter of the services required, and the public need for its performance.” So, we submit that under the principle of this decision the duty to furnish the electric railway transportation is “cotermin- ous with the powers of the corporation,” and in considering the question of whether the company should be ordered to restore the electric railway business, the Court must consider the “pro- ductiveness of the corporate business as a whole.” This decision had followed the case of Minneapolis & St. Louis Ry. Co. v. State of Minnesota, 186 U. S., 257 ; 46 L. Ed, 1151, in which the Court had upheld a rate on carload lots “pro- vided the companies are able to earn a fair profit upon their entire business.” In the Missouri P. R. Company case, supra, which was also one of the leading cases on this subject, the Company was ordered to install a passenger service on a line from Madison, Kansas, to the Missouri State line, even though such line could be operated only at a loss. The decision was placed upon the ground that the duty to operate such service was incidental Senan Rav. Pwr. Co., Erc., et al. v. Strate or S.C. 29 to the corporate existence of the Company, and the question of loss must be referred to the entire system. The Court said that it was not necessary to review the finding of fact by the State Court as to the earnings of the entire system, even if it had the power to do so, adding: “We say this because, when the controversy here pre- sented is properly analyzed, the first and pivotal question arising is whether the order complained of did anything more than command the railroad company to perform a service which it was incumbent upon it to perform as the necessary result of the possession and enjoyment of its charter powers, and which it could not refuse to perform as long as the charter powers remained and the obliga- tion which arose from their enjoyment continued to ex- ist. My The Court then after comparing the decision in the Atlantic Coast Line case above discussed, concluded by saying: “But where a duty which a corporation is obliged to render is a necessary consequence of the acceptance and continued enjoyment of its corporate rights, those rights not having been surrendered by the corporation, other considerations are, in the nature of things, paramount, since it cannot be said that an order compelling the per- formance of such a duty at a pecuniary loss is unreason- able. To conclude to the contrary would be but to declare that a corporate charter was purely unilateral ; that is, was binding in favor of the corporation as to all rights con- ferred upon it, and was devoid of obligation as to duties imposed, even although such duties. were the absolute cor- relative of the rights conferred. . . .” (54 L. Ed, 479-480. ) This case shows the inherent obligation of a public service corporation to perform the services authorized as the correlative of the rights conferred. It also indicates the force and effect, which we submit should be given to the findings of fact by the State Supreme Court. 30 Broan Riv. Pwr. Co., Erc., et al. v. State or S. C. In the Puget Sound case, supra (244 U. S., 574), this Court upheld the order of the Commission, though it was con- ceded that the order would require the street railway com- pany to operate certain lines at a loss. The company contended that it could not be required to operate under the order, par- ticularly as these lines had formerly belonged to other com- p»nies whose property had been taken over and consolidated. “But,” the Court held, “we cannot accede to the suggestion that the question whether the Commission’s order is confis- catory or otherwise arbitrary within the inhibition of the 14th Amendment is to be determined with reference alone to the Alki, the Fauntleroy, or the Ballard beach lines, These are and long have been operated by plaintiffs as parts of a system comprising 200 miles of tracks.” The Court then held the Northern P. R. Co. v. North Dakota case inapplicable, saying the case was controlled rather by St. Louis & S. F. R. Co. v. Gill, 156 U. S., 649, 39 L. Ed., 567, where it was held: z . . that the correct test was as to the effect of dus tet on is Aetenincts anita thon, endl och egce teat part which was formerly a part of one of the consolidating roads ; that the company cannot claim the right to earn a net profit from every mile, section, or other part into which the road might be divided, nor attack as unjust a regulation which fixed a rate at which some such part would be unremunerative; . . .” This principle was also illustrated and applied in the above cited Fort Smith case (supra), in which the Company was required to rebuild and regrade a line even at a loss; also in the New York & Queens Gas Company case (supra), in which the Company was required to extend its gas service into a com- would be inadequate to meet the expenditure required, the Court saying: “Corporations which devote their property to a public use may not pick and choose, serving only the portions of = Broad Riv. Pwr. Co., Erc., et al. v. S atgor S.C. 31 the territory covered by their franchise which it is pres- ently profitable for them to serve, and restricting the de- velopment of the remaining portions by leaving their in- habitants in discomfort without the service which they alone can render.” In this case the Court commented on the fact that it was one of the “important purposes” of the Commission “to correct this disposition (of such companies) to serve where it is profit- able and to neglect where it is not,” and that Courts were “without authority to substitute for its (the Commission’s) judgment their views of what may be reasonable and wise.” To the same effect see the similar Woodhaven Gas Light Co. case, 269 U. S., 244, 70 L. Ed., 255. (Charter of 1891 Embraced Electric Railway-Light- and-Power Service. ) Applying these principles to this case we see that the com- panies cannot be allowed to abandon the electric railway serv- ice. First, the charter, particularly when taken in connection with the City ordinances enacted in pursuance of its require- ments, imposed a positive duty to operate. (Clearly the State charter-franchise must be construed in connection with the City ordinances. The right to operate in Columbia granted by the State was conditioned upon obtaining the City’s consent. This consent was sought and obtained pursuant to said char- ter, and the charter and ordinances accepted and acted upon by the company. This of course made the ordinances a part of the charter powers and obligations. ) _ Now the right acquired by the company ( formerly conferred upon the Columbia Electric Street and Suburban Railway and Electric Power Comnpany) “to . . . provide electric power for any . . . purposes” (Section 5, page 812) and “to Operate their cars . . . with electric power . . .” (Section 6) was expressly made subject to the proviso “that 32 Broap Riv. Pwr. Co., Erc., et al. v. State or S. C. said company begins to operate its railway in said ct; _ within five years” (Section 8). The ordinances expressly provided, among other things “It shall be the duty of the company on week days to run a car for passengers at least every hour from 7:00 a. m. to 9:00 p. m. . .” and also prescribe a penalty for neglect or refusal “to run their passengers care as herein provided” (Section 555, page 836). They further, particularly reserved the right to City Council to regulate by ordinances the manner of operating said electric railway and to alter and amend the ordinances re- lating thereto as in their judgment the public welfare might demand (Section 565, page 840). The Act of 1920 (31 Stat., 741-742) now appearing as Section 5059 of the Code of 1922, Chap. 54, entitled “Street and Suburban Railways,” provides inter alia, under the cap- tion “Conditions of Cars—Number—Duties of Railway Com- mission—Tracks and Structures”—‘“All corporations operat- ing electric railways shall have and keep im constant oper- ation a sufficient number of cars, convenient, comfortable and clean cars, to transport the usual number of persons desiring transportation.” (Code of 1922, p. 1532.) The original charter granted to this company was subject, under the Constitution of 1868 to amendment (Art. 12, Sec. 1), and also likewise under the statutes then in force. (19 Stat., 546) Code 1922, Sec. 4250. This provision, therefore, became a part of the charter obli- gations of the company. See Tomlinson v. Jessup, 82 U. S., 454, 21 L. Ed, 204. McCandliss v. R. R. Co., 38 S. C., 103 at 113. Also the effect of the Act of 1891, creating the Columbia Electric Street Railway, Light & Power Company, was to confer upon one corporation the consolidated public utility privileges for this community, the electric railway, electric light and electric power (and gas). It was a consolidated grant of electric privileges, street railway, light and power, insepara- bly linked. Broap Riv. Pwr. Co,, Etc., et al. . Stare of S.C. 33. The object of this consolidation was that the public might be better served with these public utilities. The object was pri- marily the public benefit. The electric railway privileges were granted in order that the electric light and power business might more usefully serve the public; the electric light and power privileges were granted in order that the electric rail- way phase might better serve the public. “These special privi- leges,” as was said by the Circuit Court of Appeals about this very company (27 F. (2nd) 52, “were conferred upon them . . + im consideration of their providing facilities for communication and intercourse with the public.” Whatever may have been the case before acceptance, we sub- mit that when the corporation accepted these consolidated privileges and acted upon them, and built and constructed its electric power plants, sub-stations, electric lines, poles and other electric railway facilities, all as parts of one electric business, it can not now be permitted to separate the electric railway from the electric light and power phases of the franchise. Moreover, the acceptance of this charter-franchise from the State for the operation of this combined public service cer- tainly created a contract between the State of South Carolina and the company. “All Courts at this day are estopped from questioning the ee Chenango Bridge Company v. Binghamton Bridge Co., 18 L. ed., 137, at 142, 70 U. S., 51; New Orleans Light Com- pany v. La, Light, etc., Mfg. Co., 115 U. S., 650, 29 L. Ed., 516. This being true, it necessarily follows from the nature of a contract that the company must perform all the services. It is elementary that a contract must be treated as an entirety. Thus if a School Board should employ one to teach the sub- jects of Latin, History, and Mathematics, and furnish to such teacher a building in which to carry on such instructions, can it be supposed that the teacher would have the right thereafter toabandon the teaching of Mathematics if he should find it more burdensome and less profitable, and yet be allowed to continue the privilege of teaching Latin and History? The situation 34 Broap Riv. Pwr. Co., Erc., et al. v. State oF S. C. here is analogous. The company was employed for the purpose of carrying on the electric street railway, light and power serv- ices in this community, and the State furnished the company with the facilities and with its patronage. Can it now reason- ably be supposed that the company shall be allowed to abandon the electric street railway branch of its obligations at its option, and yet continue the privilege of supplying electric light and power, and still make use of the State franchise and of the assets and property furnished by the State? “When a special act of incorporation has been accepted ac- cording to its terms, . . . a binding contract between the state on the one hand and the incorporators and cor- poration on the other results, so that all the rights, duties, and liabilities expressed or implied in the act attach, and cannot thereafter be withdrawn or impaired by the state in violation of the grant or cast off by the incorporators or the corporation without the consent of the state . . .” (14 C. J., 110). Also the record shows, and the South Carolina Supreme Court found, that the electric railway is inseparably connected with the electric light and power business, by the manner of its physical construction and operation as well as by the char- ter franchise contract. During the thirty years of joint operation the company has constructed and/or acquired power plants, sub-stations, poles and wires and rights-of-way. This property was con- structed with funds from the joint operation. It obviously can- not now be separated and used exclusively for electric light and power purposes. “This joint use requires a prorating of joint investment and expenses, and of the return from the joint enter- prise.” United Fuel Gas Company v. Railroad Commission of Ky., 278 U. S., 300, 73 L. Ed., 390. On account of such construction and joint operation all this electric system has, we submit, as was said in the Chesapeake & Ohio case (supra) (about passenger and freight service) Era come “devoted to the transportation of passengers as well as” to the distribution of light and power. “The obligation to use it for both was imposed by law, and so could not be ee en ee . . Company” (page 522). "We therefore submit that the company is under an obligation to continue the service—both on account of the language of the charter (and ordinances) and of the nature and insepara- bility of the services authorized. . “To conclude to the contrary would be but to declare that a corporate charter was purely unilateral ; that is, was binding in favor of the corporation as to all rights con- ferred upon it, and was devoid of obligation as to duties imposed, even although such duties were the absolute cor- relative of the rights conferred . . . (216 U. S., 262, 54 L. Ed., at 479).” If there were any doubt about the construction of this charter, then we submit that “Grants of franchises are strictly con- strued in favor of the public . . . Where a grant is sus- ceptible of two meanings, one restricting and the other extend- ing the powers under a franchise, that construction is to be adopted which works the least harm to the state . . .” (26 C. J., 1031-1033). Cf. Blair v. Chicago, 201 U. S., 400; 50 L. Ed., 801. FRANCHISES CONSOLIDATED BY ACT OF 1891 We submit there is no merit in the company’s present con- tention that the franchises were not combined or consolidated by the Act of 1891. In this connection we have this striking situation: That whereas the companies by their joint answer admitted that the franchises had been consolidated by the Act of 1891 (R., 14), but claimed that they had been separated under the Merger Act (R., 23), the companies seem now—after the adverse ruling by the Referee and the Court as to the attempted separation— to rely principally on the contention, first injected into the Ae ete: ENGR she oe 36 Broap Riv. Pwr. Co., Erc., e¢ al. v. Stats or S. C. case by the report of the Referee, that the franchises were never consolidated and combined by the Act of 1891. This represents a significant change of front. The Act of 1891 by its terms clearly provided for the con- solidation of the electric street railway and power franchise, formerly granted to the “Columbia Electric Street and Subur- ban Railway and Electric Power Company,” with the gas and electric franchise, formerly granted to the “Congaree Gas & Electric Company,” and authorized the consolidated company to purchase the street railway property and franchise (with- out any electric features) of the Columbia Street Railway Company. The Act by its terms says that the two first com- panies “have agreed to consolidate the property, franchises and privileges owned and held by them,” and then authorized them to consolidate their property, franchises and privileges into a new company, the Columbia Electric Street Railway, Light and Power Company, an entirely new company. (Sec- tion 1.) The name is different from that of either of the con- solidating companies and the name is significant as indicating the business it is to do. It is to be noted that the Act authorized the consolidation of the two first companies and the purchase of the other. The Act then said (Section 2) that upon such consolidation, the consolidated company should “be vested with all the rights, franchises, powers and privileges conferred upon the consolidating companies” by the former Acts, and, upon the purchase of the old Columbia Street Railway Company, “should be vested with all the rights, powers, franchises and priv- ileges” .formerly conferred upon that company. The Act further conferred all these powers constituting this consol- idated franchises upon the consolidated company for a period of fifty years, whereas the franchises granted to the former companies had been limited to thirty years from the dates of their incorporation respectively (R. 809). The companies effected the consolidation and the purchase authorized (see Exhibit 10, p. 13), and thereupon the old com- panies, as was stated in the “Report” on the company, went — | “out of existence by reason of the consolidation.” (See Ex- hibit 10, p. 9.) | Broap Riv. Pwr. Co., Erc., et al. v. State or S.C. 37 This Act therefore, we submit, clearly created a new cor- poration, and hence the company derived and held all its powers thereafter from said Act of incorporation just as though the old companies had never been created or existed. “According to the prevailing view statutes providing for the consolidation of corporations are to be treated as acts of incorporation, and on consolidation being effected under their provisions, the constituant companies, unless such an intention is excluded by the language of the stat- ute, are deemed to be dissolved, and their powers and faculties, to the extent authorized, become vested in the consolidated company as a new corporation created by the act of consolidation. The new corporation is an entity distinct from any of its constituents, and draws its life from the act of consolidation. The fact that the powers of the new company are conferred upon it by a reference to the powers and privileges of the old companies does not affect this result. The powers are not for that reason, mere continuations of the powers of the old corporations, nor is the new corporation, for that reason, any less an entity dis- tinct from the constituent companies.” ge SE oe 170.) Citing the following among other authorities: Clearwater v. Meredith, 1 Wall., 25, 17 U. S. (L. Ed.), 604. Central Railroad, etc., Co. v. Georgia, 92 S. U., 665, 23 U.S. (L. Ed.), 757. Shields v. Ohio, 95 U. S., 319, 24 U. S. (L. Ed.), 357. Maine Cent. R. Co. v. Maine, 96 U. S., 499, 24U. S. (L. Ed.), 836, Atlantic, etc., R. Co. v. Georgia, 98 U.S., 359, 25 U.S. (L. Ed.), 185. St. Louis, etc., Ry. Co. v. Berry, 113.U. S., 465, 5 S. Ct., 529, 28 U. S. (L. Ed.), 1055. Pullman’s Palace Car Co. v. Missouri Pac. R. Co., 115 U. S., 587, 6 S. Ct., 194, 29 U. S, (L. Ed.), 499. Minneapolis, etc., R. Co. v. Gardner, 177 U. S., 332, 30 S. Ct., 656, 44 U. S. (L. Ed.), 793. Yazoo, etc., R. Co. v. Adams, 180 U. S., 1, 21 S. Ct, 240, 45 U. S. (L. Ed.), 396. Chicago Title, etc., Co. v. Doyle, 259 Ill., 489, 102 N. E., 790, 47 L. R. A. (N. 38 Broap Rrv. Pwr. Co., Erc., et al. v. State or S. C. S.), 1066. Notes: 89 A. S. R., 612,2 L. R. A, 564;3 L. R. A., 435; 8 L. R. A., 499. Note: 89 A. S. R.,.613, 614. This principle of law was announced by this Court many years ago and has become the settled ruling of this Court. Atlantic, etc., Railroad Co. v. Georgia, 98 U. S., 359, 25 L, Ed., 185. Memphis, etc., Railroad Co. v. Berry, 112 VU. S., 609, 28 L. Ed., 837. Chesapeake & Ohio Railroad Co. v. Miller, 114 U. S., 176, 29 L. Ed., 121. Wabash, Saint Louis, etc., Railroad Company v. Ham, 114 U. S., 587, 29 L. Ed., 235. Pullman Palace Car Company v. Missouri Pacific Railroad Co., 115 U. S., 587, 29 L. Ed., 499. Keokuk and W. R. Com- pany v. Missouri, 152 U. S., 301, 38 L. Ed., 450. Louisville Water Co. v. Clark, 143 U. S., 1, 36 L. Ed., 55. In the above cited Atlantic & Gulf R. R. Co. v. Georgia (25 L, Ed., 185), the Court held that as a result of such an act of consolidation, the consolidated company held its franchises solely as a result of such consolidated act. “Tt is therefore, a vital question,” said the Court as to the consolidation, “what was its effect? Did the consoli- dated companies become a new corporation, holding its powers and privileges as such under the Act of 1863? .. . Looking thus at the Legislative intent appearing in the consolidation act, we are constrained to the conclusion that a new corporation was created by the consolidation effected thereunder in the place and in lieu of the two companies previously existing, and that whatever fran- chises, immunities or privileges it possesses, it holds them solely by virtue of the grant that Act made. That generally the effect of consolidation, as distinguished from an union by merger of one company into an- other, is to work a dissolution of the companies con- solidating, and to create a new corporation out of the elements of the former, is asserted in many cases and | it seems to be a necessary result.” This Court also in the subsequent case of Rochester v. City of Rochester, 205 U. S., 236, 51 L. Ed., 784, pointed out that where the old companies cease to exist the franchises of the — consolidated company are to be held as having been conferred Broap Riv. Pwr. Co., Erc., et al. v. Statgor S.C. 39 by the Act of consolidation. The Court in that case also upon that ground distinguished Tomlinson v. Branch, 15 Wall., 460; Central R. & Bkg. Co. v. Georgia, 92 U. S., 665, and the other cases relied upon by petitioners herein, in that in such cases the old corporations continued “to exist as a corporation that ground distinguished Tomlinson v. Branch, 15 Wall., 460; Central R. & Bkg. Co. v. Georgia, 92 U. S., 665, and the other cases relied upon by petitioners herein, in that in such cases the old corporations continued “to exist as a corporation “ owning and operating its property by virtue of its own shar- ter.” Also the South Carolina Supreme Court had previously held in the case of Railroad Co, v. Gibbes Treas. (27 S. C., 385), in regard to a similar consolidation Act, “the. consolidation, however, in 1869 dissolved the two original companies and. created an entirely new company—the appellant—with rights and privileges not dependent or derived from the charters of the original companies, but upon the Act authorizing the consolidation and the law governing corporations at the time.” It will readily be seen upon examination that all the cases cited by the appellants (15 Wall., 460, 21 L. Ed., 757; 10 How., 376, 13 L. Ed., 461; 18 Wall., 206, 21 L. Ed., 888; 92 U.S., ...., 23 L. Ed., 757; 92 U. S., 677, 27 L. Ed., 750; 94 U.S., 714, 24 L. Ed., 310; 109 U. S., 104, 27 L. Ed., 872) are entirely inapplicable to the case at bar, except so far as they support our position, and may be distinguished upon the ground that the consolidating companies were expected to continue to exist with their separate charters, powers and func- tions. In considering this question also we call attention to the fact that franchises are to be strictly construed, and that con- struction adopted which works the least harm to the public. (Blair v. Chicago, 201 U. S., 400, 50 L. Ed., 801; North- western Fertilizer Co. v. Hyde Park, 97 U. S., 659, 24 L. Ed., 1036; Slidell v. Grandjean, 111 U. S., 412.) Also it must be noted that in the Missouri P. R. Co. v. Kansas, 216 U. S., 262, 54 L. Ed., 472; and Puget Sound T. L. & P. Co. v. Reynolds, 61 L. Ed., 1325, the Court applied ya y 40 Broap Riv. Pwr. Co., Erc., et al. v. State or S. C. the principles as though the companies held all their privileges under one charter, without even discussing the effect of the consolidations therein involved. The same principle was applied by the Massachusetts Supreme Court in the case of Brownell et al. v. the Old Colony Railroad Co., 29 L.. R. A., 169, where- in the Court held that the ferry franchise had been blended with the Railroad Company franchise, and therefore could not be separately abandoned. We submit therefore that the Act of 1891 conferred a com- bined and consolidated franchise upon the company for the operation of the electric railway, light and power services, de- riving all its powers and privileges from such Act. Clearly it was not necessary for the Act to declare in terms that one service should not be exercised except in connection with the others. This followed as a necessary result of the single grant, to the one company. This was the major purpose of the consolidation—for the greater benefit of the public. The South Carolina Supreme Court has construed this Act of 1891 as granting a consolidated franchise for the operation of the electric street railway, light and power business as one business. Construction of such State Statute is “a matter primarily for determination by the local Courts.” Gilchrist v. Interborough Rapid Transit Co., 279 U. S., 159, 73 L. Ed., 652 (at 664). Petitioners’ Cases Inapplicable. Taking it to be established that the electric railway is an inseparable part of the business operated under the electric rail- way, light and power franchise of petitioners, we submit, it is apparent that none of the cases relied upon by the petitioners are applicable. Indeed upon analysis all these cases will be found to recog- — nize the principle that the grantee of a franchise cannot evade the responsibilities while retaining the benefits thereof. ; The language of every decision must be interpreted in the = light of the facts of the case involved. It will be seen that the — facts of all the cases relied upon and cited by petitioners are utterly different from the facts in the case at bar. " Broap Riv. Pwa. Co., Erc., et ol. v. Grater S.C. 41 The case of the Railroad Commission v. Eastern Texas Rail- road Co., 264 'U. S., 79, 68 L. Ed., 569, relied upon and quoted extensively by appellants, dealt only with an ordinary steam railroad, the charter for which had been taken out under a general law of the State of Texas, and which, of course, con- tained no electric light or power or other public utility features. The company had been organized primarily for the purpose of developing a lumber industry in the section in question, but about 1917, some time before the commencement of this action, the supply of timber had been exhausted, the lumber industry closed, and the people formerly employed therein moved away. It was conceded by the State of Texas in the United States Supreme Court that under these circumstances the road could not be compelled to operate, and this action was really prose- cuted to recover damages against the company for failure to operate the road. The opinion is expressly predicated upon the company’s having the “usual permissive charter of a railroad company,” which is certainly not the kind of charter which the petitioners enjoy. It is needless to elaborate the points of distinction between that case and the case at bar. Moreover the case recognized ee ee ce ee conferred by its charter, the State has power . ; . . fequire it to provide ... ain tthe for serving the public even though compliance be attended by some pecuniary disadvantage.” The decision was expressly based upon the ground that the company had entirely ceased to exer- cise the privileges conferred by its charter. The Brooks-Scanlon Co. v. Railroad Commission, 251 U. S.., 396, 64 L. Ed., 323, referred to in the above Texas case was a very similar case. There the company involved was organized primarily to “manufacture and deal in lumber and to carry on other incidental business.” “The road,” as the Court said, “was primarily a logging road, but it nay be assumed to have done business for third persons as a common carrier.” The company was therefore not in any sense primarily a public service cor- poration, but was essentially an ordinary private corporation doing only a small amount of business as a common carrier incidental to its lumber and logging business. When therefore 42 Broap Rwv. Pwr. Co., Erc., et al. v. State or S. C. the timber of the company had been cut and there was no longer any deed of the railway business as “incidental” to its lumber business, the company was allowed to discontinue the railway because it was giving up its entire public service privileges. The Court expressly said: “Tt is true that if a railroad continues to exercise the power conferred upon it by a charter from a State, the State may require it to fulfill any obligation imposed by the charter, even though fulfillment in that particular may cause a loss. Missouri P. R. Co. v. Kansas, 216 U. S., 262, 276, 278; 54 L. Ed., 472, 478, 479; 30 Sup. Ct. Rep., 330” (page 326). The Electric Street Railway-Light-and-Power Company here involved is certainly continuing “to exercise the powers con- ferred upon it by its charter from the State” and so falls with- in this principle recognized in the above case. The case of Bullock v. State of Florida, 254 U. S., 513; 65 L. Ed., 380, also dealt with a logging road, and merely involved the question of whether a decree for the foreclosure of a mortgage on such road could properly provide for the privilege of dismantling. As a matter of fact the decision of the Supreme Court of Florida (58 Fla., 321, 8 A. L. R., 322), prohibiting the sale with the privilege of dismantling was not disturbed by the United States Supreme Court. The case of the [Ulinois Trust & Saving Bank v. Doud, 105 Fed., 123, 52 L. R. A., 481, relied upon by petitioners really involved the question of whether one who had advanced money for the erection of an addition to the power plant of the com- pany was entitled to a priority in the distribution of the assets of the corporation which was in the hands of a receiver under foreclosure proceedings. Therefore the quotation cited by pe- titioners was obiter dictum. It was moreover recognized and stated in the opinion that the franchise of a corporation may be forfeited “for such a misuse or nonuse” of the powers or privileges contained in its organic law as “results in a substantial failure to fulfill the design and purpose of its organization.” Citing many cases (91 Iowa, 517 cae ~ ___ Broa Riv. Pwr. Co., Erc., et al. v. Starz or S.C. 43 1 $2 Ohio State, 487 ; 10 Ohio, 535; 51 Miss., 602; 73 Ill, 541; 5 Ark., 595; 9 Mo. App., 114). Under the principle of this case we earnestly submit that the franchise of respondents can be forfeited because the non- operation of the electric railway certainly “results in a sub- stantial failure to fulfill the design and purpose of its organiza- tion.” The other cases from the United States Court referred to in some of the decisions relied upon by petitioners, Northern P. R. Co. v. North Dakota, 236 U. S., 585; 59 L. Ed., 741; Norfolk & W. R. Co. v. West Virginia, 236 U. S., 605; 59 L. Ed., 745, merely involve the question of the adequacy of rates fixed by State statutes, and appear to us to be irrelevant— they do not touch the question of the abandonment of any of the primary purposes for which the corporation was created. The same is true of the subsequent case of Chicago M. & St. Paul R. R. Co. v. Public Utilities Co., 71 L. Ed., 1085; 274 U. S., 344. We do not deem it necessary to discuss in detail the other cases or authorities cited. Mt. Carmel Public Utility & S. Co. v. Public Utility Com., 297 Ill., 303; 21 A. L. R., 571; Northern Minos L. & T. Co. v. Illinois Commerce Company, 302 Ill, 11; 234 N. E., 132; Trinidad Electric Trans. Ry. & Gas Co., P. U. R., 1922-C, 299, further than to say that in none of them does it appear that an electric railway constructed and operated for many years under an electric street railway, light and power (and gas) franchise from City or State has been allowed to be abandoned. As to the Mt. Carmel case, 297 Ill., 303, 21 A. L. R., 372, it appears from the report of the case that the right of the com- pany to carry on the heating branch of its service was obtained under a different ordinance from the right to carry on the other public services. Moreover the case expressly recognizes the general principle that “a corporation may be required to fulfill an obligation imposed by its charter even though it may be done at a loss.” The decision of the case was also based in part upon the fact that the order of the commission was not based upon any findings of fact. Nor is there any showing s 4 4, 44 Broap Rw. Pwa. ©o., Erc., et al. u State or S. C. in’ the Northern Illinois L. & T. Co. v. Illinois Commerce Commission, 302 Ill, 11, that the right to carry on the electric street railway business was a part of any general franchise granted by the State to carry on such business as a part of its general electric street railway and power business. It may be conceded that there are no decisions of this Court on the precise question here discussed, that is, as to the aban- donment of the electric railway phase of an electric street railway, light and power franchise. The Texas Railway Com- pany case, sura, did not involve any such consolidated fran- chise, and the Brooks-Scanlon Company was not even a public service corporation. We think, however, that the weight and principle of the decisions of this Court hereinbefore cited by us are against allowing such abandonment. Public Utility Canno’ Abandon Branch of Charter Pur poses Because of Loss. It is argued that this would require the other branches to make up the loss, and that under the Northern Pacific (236 U. S., 585), and the Brooks-Scanlon cases (251 U. S., 296), one class of patrons of a public utility can not be made to pay a higher rate for the benefit of another class. But this argument is, we submit, entirely erroneous—the answer to it is perfectly clear. The owners of the public utility must accept smaller dividends, must absorb the loss, if they do not choose to give up the charter. The other branches need not be required to make up the loss; the other branches need not be required to pay any higher rate. The Constitution does not guarantee the owners of a public utility any particular return on their investment. Fort Smith L. & T. Co. v. Bourland, 267 U. S., 330, 69 L. Ed., 631 (saying) : “A railway may be compelled to continue service of a branch or part of a line although the operation im volves aloss. . . . This is true even where the system as a whole fails to earn a fair return upon the value of the property.” Broap Riv. Pwr. Co., Erc., et al. v. Stare or S.C. 45 See also to the same effect Milwaukee Electric Ry. & P. Co. v. Wisconsin, 252 U. S., 100, 64 L. Ed., 476, and Woodhaven Gas Light Co., case 269 U. S., 244, 70 L. Ed., 255. It may be conceded that, if it were merely a question of rates, the rates cannot be so adjusted as to favor one class of patrons at the expense of another—which is all that was really involved in the Northern Pacific case. But this is not a rate case. The question here is whether a public utility chartered for certain purposes can abandon one of those purposes while retaining the benefit of that charter; whether a public utility can retain the more profitable but escape the present by less profitable phases of its franchise; whether a public utility can abandon a public service which it alone is in position to render and leave the public to suffer. Can a railroad company abandon its passenger service on account of loss while retaining the profitable freight business ? This question has been answered in Missouri Pacific; the Chesapeake & Ohio, and other cases. The situation here is in principle identical. Can this Electric street-railway-light-and- power company—its primary purpose having been clearly in- dicated in its original name—abandon the electric railway serv- ice while retaining all the necessary electrical features for its operation, and permanently deprive the City of Columbia and community of this essential service? The answer has been em- phatically given by this Court in the foregoing Atlantic Coast Line, Missouri Pacific, New York & Queens Gas Co., Wood- haven Gas Co., Chesapeake & Ohio, and United Fuel Gas Company, cases—to the effect that (paraphrasing) “the primary duty of a public utility to serve does not permit it to pick and choose and serve only where it is most profitable” ; “leaving the remainder” “in discomfort” “without the service whieh it alone is in position to give,” and this duty “cannot be avoided merely because it will be attended by some pecuniary loss.” Moreover, even if this were a rate case, then it would be necessary to appraise the value of the property now devoted to the electric light and power business, ascertain the contributions 46 Broan Riv. Pwr. Co., Erc., et al. v. State or S. C. made towards its construction and development in the thirty- five years of joint operation by the electric railway patrons, and give that branch a proportionate share of the income attributed to that property. For certainly the electric railway is a “related business”’ to the electric light and power business, and as was held in the United Fuel Gas Company case “This joint use requires a prorating of joint investment and expenses and of the return from the joint investment.” (In this connection we may say it is common knowledge that up till recent years the electric railway was the major department of such an electric street railway, light and power business.) We think it apparent from the record that an excessive proportion of the income has been of late years attributed to the so-called electric de- partment to the prejudice of the railway department, and that if proper credit were given the so-called railway department would not show any loss. But, however that may be, we submit,confidently that the company cannot be allowed to abandon the railway service even if it concededly could only be operated at a loss. The question of loss on this service is immaterial as long as the company re- tains the benefits of the charter. We say this because as was said in the Atlantic Coast Line and Missouri Pacific cases, this is “the primal duty” of this company, “coterminous with the powers of the corporation” (206 U. S., 1), “which it was incumbent upon it to perform as the necessary result of the possession and enjoyment of its charter powers, and which it could not refuse to perform as long as the charter powers remained” (216 U. S., 262). It is moreover, we believe, the generally accepted doctrine in the State Courts, as well as the Federal Courts, as indicated in the cases already cited, that a public utility company can give up its franchise only by consent of the State, unless it is (1) insolvent, and (2) incapable of being operated ex- cept at a continuing loss. 22 R. C. L., p. 750; State v. Dodge City M. & T. Ry. Co., 53 Kan., 377, 36 Pac., 747, 42 Am. St. Rep., 295; Gates v. Boston & N.Y. A. L. R. R. Co., 53 Conn., 333, 5 Atl., 695; Peo. v. Colo. Title & Trust Co. (Colo.) 178 Pac., 6; Som Broap Riv. Pwr. Co., Erc., et al. v. State or S.C. 47 Ry. Co. v. Hatchett, 174 Ky., 463, 192 S. W., 695; L. R. A., 1917-D, 1105; State ex rel. Bridgeton v. Bridgeton & M. Trac. Co., 62 N. J. L., 592, 45 L. R. A., 837; State ex rel. Grinsfelder v. Spokane St. Ry. Co., 19 Wash., 518, 41 L. R. A., 515; Potwin Place v. Topeka R. Co., 51 Kan. 609, 37 Am. St., 312; Paige v. Schenectady R. Co., 178 N. Y., 102; Thompson v. Schenectady R. Co., 65 C. C. A., 325, 131 Fed., 577; In Re. Loader, 14 Misc., 208, 35 N. Y., Supp., 996 (pointing out necessity of company coming to terms with labor). In the above cited Southern Ry. Co. v. Hatchett case the Court pointed out that all the principal cases where abandon- ment has been actually allowed, particularly Jack v. Williams, 113 F., 823 (145 F., 281), turned upon the insolvency and worthlessness of the company as a whole. This also applies to the Teras case. It was evidently in recognition of this doctrine that the companies here tried to separate the franchise and destroy the Columbia Railway, Gas & Electric Company, and have now as a last resort undertaken to argue that the franchise was never consolidated. No Valid Separation Under the Merger Act. There has been no valid separation under the so-called Merger Act. ‘(It is interesting to note that petitioners while calling the Act in their answer the “Merger Act” have now begun refer- ring to it as the “Enabling Act.”) We respectfully invite the Court’s attention to the con- current findings of the referee and of the Supreme Court on this question, which state the facts fully. The Merger Act was no part of the Canal Settlement. The Act creating the Canal Commisdion conferred {no power whatsoever to deal with any attempted separation of the company’s franchise (see S. C. Acts 1923, p. 828, Acts of 1924, p. 1839). Mr. Barnett, Secretary of the Canal Commis- sion, testified that the commission expressly declined to embody any reference to the Merger Act in the Canal Settlement Bill (see R. 782-787), the Bill being thereafter duly passed by the BEI VIM 48 Broap Rw. Pwr. Co., Erc., et al. v. State or S. C. Legislature and containing no reference to the Merger Act or any alleged separation (see Acts of 1925, pp. 852-859). . Moreover the Merger Act itself did not purport to authorize any alleged separation, but on the contrary expressly provided that any such merger or sale as authorized should be “made without prejudice . . . to any rights of any creditors . . .«,” and also that the transferee of the franchises should hold them “subject . . . to the restrictions, requirements and conditions in the said franchises contained” (R. 807). The Act was plainly intended to authorize the transfer or merger of the properties and franchise without in any wise re- leasing the companies from any of their obligations. It was so found by the South Carolina Supreme Court. No doubt it was the intention of petitioners to utilize such act as a justification for the attempted separation and abandonment of the electric railway service, but such purpose does not appear in the language of the Act. But if there was any ambiguity in the Act itself, such ambiguity should be resolved in favor of the public and against the company. “It may be,” as was said by Mf. Justice Day in the case of Blair v. Chicago, 201 U. S., 400, 50 L. Ed. 801, “that the very ambiguity of the Act was the means of securing its passage. Legislative grants of this character should be in such unequivocal form of expression that the Legislative mind may be distinctly impressed with their character and import, in order that the privileges may be intelligently granted or pur- posely withheld. It is a matter of common knowledge that grants of this character are usually prepared by those inter- ested in them, and submitted to the Legislature with a view to obtain from such bodies the most liberal grant of privileges which they are willing to give. This is one among many rea- sons why they are to be strictly construed. . . . This principle has been declared axiomatic as a doctrine of this Court. Northwestern Fertilizing Co. v. Hyde Park, 97 U. S., 659, 666, 24 L. Ed., 1036, 1038. In Slidell v. Grand- jean, 111 U. S., 412, 438, 28 L. Ed., 321, 330; 4 Sup. Ct. Rep., 475, it is declared a wise doctrine: “It serves to de feat any purpose concealed by the skillful use of the terms to | : 4 Broap Riv. Pwr. Co., Erc., et al. v. STATE OF S.C. 49 | accomplish something not apparent on the face of the Act, and thus sanctions only open dealing with legislatives bodies ” (p. 831). Moreover under the facts in this case, as shown by the record, and as found by the South Carolina Supreme Court, there has clearly been no valid separation, but on the con- trary a merger of these two companies. The president of the Broad River Power Company in the advertisements relative to the sale of bonds referred to the Broad River Power Company as controlling and operating the electric railway property and service (see Ex. 27) and having acquired “through merger” the properties of Columbia Railway, Gas & Electric Company (see Ex. 15 McF), and petitioners’ counsel also referred to the transaction as a merger (see Ex. 2 R., p. 808). Also the facts that the Broad River Power Company owned all the common stock, and practically all the preferred stock, had the same officers and offices and took practically all the assets from the one company and put them in the name of the other, without any consideration, leaving the old company in a helpless condition (Ex. A-26) and then undertook to advance certain operating funds to the old company, without security or due date, and thereafter undertook to put the Co- lumbia Railway, Gas & Electric Company into bankruptcy so as to put a stop to this proceeding—all these facts show that the Columbia Railway, Gas & Electric Company has been treated as a mere instrumentality or agency or depart- ment of the Broad River Power Company. Under these circumstances we think there has clearly been a merger of the two companies in accordance with the fre- quently expressed opinions of this Court and of the South Carolina Supreme Court. Davis v. Alexander (U. S.), 70 L. Ed., 186. Chicago M. & St. P. R. Co. v. Minneapolis C. & C. Association, 247 U. S., 490, 62 L. Ed., 1229. United States v. Lehigh Valley R. Co., 220 U. S., 357, 55 L. Ed., 458, 463, 31 Sup. Ct. Rep., 387. 50 Broap Riv. Pwr. Co., Erc., et al. v. State oF S. c. United States v. Delaware L. & W. R. Co., 238 U. - §., 516, 59 L. Ed., 1438, 35 Sup. Ct. Rep., 873. Brabham v. So. Express Co., 124 S. C., 157. Brown v. Am. Ry. Express Co., 128 S. C., 428. Huggins v. Com. Sav. Bank, 140 S. E., 177. Terry v. Sou. Exp. Co., 141 S. E., 144. In the case of Chicago M. & St. P. R. Co. v. Minneapolis C. & C. Association, 247 U. S., 490, 62 L. Ed., 1229, the Court applied the above principle and held that two holding corpora- tions, which owned all the stock in a subsidiary company operating in the City of Chicago, must be held to direct- ly own the property which was in the name of the com- pany so controlled. In other words, the Court completely dis- regarded the corporate fiction. The Court in that case, after pointing out that the mere ownership of capital stock alone did not of itself create an identity of corporate interest be- tween two companies, or create the relation of principal and agent or representative between the two, continued: “While the statements of the law thus relied upon are satisfactory in the connection in which they were used, they have been plain- ly and repeatedly held not applicable where stock ownership has been restorted to, not for the purpose of participating in the affairs of a corporation in the normal and usual manner, but for the purpose, as in this case, of controlling a subsidiary company so that it may be used as a mere agency or instru- mentality of the owning company or companies. United States v. Lehigh Valley R. Co., 220 U. S., 357, 55 L. Ed,, 458, 463, 31 Sup. Ct. Rep., 387, and United States v. Delaware L. & W. R. Co., 238 U. S., 516, 59 L. Ed., 1438, 35 Sup. Ct. Rep, 873. In such a case the Courts will not permit themselves to be blinded or deceived by mere forms of law, but, regardless of fictions, will deal with the substance of the transaction in- volved as if the corporate agency did not exist and as the justice of the case may require.” When we take into consideration the principles laid down in the above case in connection with the facts of this case, it must be apparent that the two corporations are merged and the Broad River Power Company is liable for the obliga- - Broap Riv, Pwr. Co., Erc., et al. v. Strate or S.C. 51 tion to perform the electric railway service. Certainly there has been either an express or implied assumption of the lia- bilities of the Columbia Railway, Gas & Electric Company (as in the Brabham case, 124 S. C., 157, and in the Huggins case, 140 S. E., 177), or a taking over of its business (as in the Terry Packing Company case, 141 S. E., 144, and the American Railway Express Company v. Commonwealth of Kentucky case, 273 U. S., 269, 71 L. Ed., 639, therein cited) or the utilization of the electric railway company as a mere agency or instrumentality of the power company (as in the Minneapolis case, 62 L. Ed., 1229). Any one or more of these reasons are sufficient to constitute a legal merger under the authorities cited. This Court and other Courts have frequently expressed em- phatic disapproval of such devices on the part of public service corporations. See Thomas v. West Jersey R. R. Co., 101 U. S., 71, 83 (25: 950, 952); Gibbs v. Consolidated Gas Co., 130 U. S., 396, 32 L. Ed., 985 (saying about a similar device to be relieved of the obligation to furnish gas service: “There is nothing upon which to rest the suggestion that the companies were unable to serve the consumers, while the record shows, on the other hand, that they simply desired to make larger profits on whatever gas they might furnish. . . .” United Fuel Gas Company v. R. R. Commission of Ky., 278 U. S., 300, 73 L. Ed., 390, saying: “We need not labor the point that a public service corpo- ration may not make a rate confiscatory by reducing its net earnings through the device of a contract unduly favoring a subsidiary or a corporation owned by its own stock- holders. Cf. Chicago & G. T. R. Co. v. Wellman, 143 U. S., 339, 345, 36 L. Ed., 170, 179, 12 Sup. Ct. Rep., 400.” The chief significance in this attempted separation, it seems to us, consists in the admission thereir. implied that otherwise the franchise was indivisible—the electric railway and the Ce AER de dene 52 Broan Riv. Pwr. Co., Erc., et al. v. State or S. C. that the electric railway is tied to the electric light and power franchise can be conceived than this unlawful, fictitious attempt to separate them. No such desperate effort would have been made to accom- plish a separation—a similar attempt having just been defeated in the company’s allied Spartanburg properties by the Spar- tamburg decision—but that the company realized the unity of its franchise. ' “Generally speaking, the practical interpretation of a contract by the parties to it for any considerable period of time before it comes to be the subject of controversy is deemed of great, if not controlling, influence. Chicago v. Sheldon, 9 Wall., 50, 54, 19 L. Ed., 594, 596. Brooklyn L. Ins. Co. v. Dutcher, 95 U. S., 269, 273, 24 L. Ed., 410, 411. District of Columbia v. Gallaher, 124 U. S., 505, 510, 31 L. Ed., 526, 527,8 Sup. Ct. Rep. 585 . . .” Old Colony Trust Co. v. Omaha, 230 U. S., 100, 57 L. Ed., 1410, at 1417. Broan Riv. Pwr. Co., Erc., et al. v. Strate or S.C. 53 THE OBLIGATION CREATED BY THE COLUMBIA ORDINANCES We submit that the acceptance of the Columbia Ordinances also created a supplemental franchise contract to operate, re- gardless of loss. The situation was in substance that the company having received directly from the State by its charter the primary franchise to operate in the City of Columbia, for a period of fifty (50) years, provided it could obtain the consent of Co- lumbia City Council, thereupon applied to Council for such consent. This consent was given by ordinances granting the right to the company to operate, provided it should operate daily and regularly and as directed by City Council. The accept- ance and operation, under these ordinances, we submit, clearly constitute a contract on the part of the company to operate at least for the fifty (50) year period of the company’s charter. The requirement that the company obtain the consent of City Council recognized the right of Council to contract as to the terms upon which such consent should be given. (See Co- lumbus R. P. & Light Co. v. Columbus, 249 U. S., 399; 63 L. Ed., 669; St. Cloud Public Service Co. v. City of St. Cloud, 265 U. S., ; 68 L. Ed., 1050; Quinby v. Public Service Commission, 3 A. L. R., 685; 223 N. Y., 244; City of Ports- mouth v. Va. Ry. & Power Co., 141 Va., 54, 39 A. L. R., 1510, in which the Court said: “This power to give such consent necessarily implies the right to refuse it, and this in turn implies a power to attach appropriate conditions thereto. . . ” \(p. 1512.) Lenawee County Gas & E. Co. v. City of Adrian, Mich., ; 176 N. W., 590; 10 A. L. R., 1328. Interurban Ry. & Terminal Co. v. Public Utility Com., 98 Ohio St., 287; 3 A. L. R., 696. 54 Broap Riv. Pwr. Go., Erc., et al. u State or S. C. Indeed no contest is made in this case about the right and power of the City of Columbia to make such a contract. This franchise contract required operation on the part of the company as the consideration for the grant. New York Elec. Co. v. Empire City Subway Co., 235 U. S., 179; 59 L. Ed., 184. Owensboro v. Cumberland Tel. & Tel. Co., 230 U. S., 58; 57 L. Ed., 1389, saying: “Grants like the one under consideration are not nude pacts, but rest upon obligations expressly or impliedly assumed to carry on the undertakings to which they re- late” (p. 192). “The original ordinance,” as was said by the Court in City R. Co. v. Citizens St. Ry. Co., 166 U. S., 557; 41 L. Ed, 1114 (quoted in Detroit v. Detroit Citizens’ St. Ry. Co., 184 U.S., ; 46 L. Ed., 592), “was plainly a proposition on the part of the city to grant to the company the use of its streets . . . in consideration that the company lay its tracks and operate a railway thereon upon certain conditions prescribed by the ordinance. This proposition when accepted by the company and the road built and operated as specified, became acontract . . .” (p, 607.) See also to the same effect Columbus R. P. & Light Co. v. Columbus, 249 U. S., 399; 63 L. Ed., 669. Moreover these ordinances expressly required the company to operate the service daily and thereafter to comply with all the regulations of Council (R., 840). City Council has enacted an amendatory ordinance requiring and directing operation (See Exhibit 35). This, Council, we submit, clearly had the right to do. (Detroit v. Detroit Citizens’ St. Ry. Co., 184 U. S., ; 46 L. Ed., 607; Lake Shore & M.S. R. Co. v. Ohio, 173 U. S., 285; 43 L. Ed., 702; Milwaukee Elec. Ry. & L. Co. — v. State of Wisconsin, 252 U. S., 100; 64 L. Ed., 476; Sum- ter Gas & Power Co. v. Sumter, 282 Fed., 931; Charleston Consolidated Railway & Lighting Co. v. City Council of | Charleston, 92 S. C., 127). rt _ _Broap Riv. Pwr. Co., Erc., et al. v. Strate or S.C. 55 In the above-cited Charleston case (92 S. C., 127), the Su- preme Court of South Carolina had held in effect that such ordinance made the City Council the agent of the Company for the purpose of directing the operation, and that the com- pany was bound by contractual obligation to comply with such regulations. Also, the provision of a “Penalty for Failure to Run” clearly implied an obligation on the part of the company -to operate. Certainly no such penalty would have been prescribed unless it was definitely understood that the company was un- der obligation to operate. The respondents alleged in their answer and contended before the Referee that this was an ex- clusive penalty, of which advantage might be taken by the companies. We assume that they have now abandoned that position as no exception to the Referee’s adverse finding there- on was taken. The authorities, however, overwhelmingly show that said penalty was prescribed for the benefit of the City to whom the obligation was due, and may not be taken advantage of by the company by whom the obligation should be performed. Pomeroy Eq. Jur., Sec. 446. First Trust & Savings Bank v. Pruitt, 121 S. C., 484. Jolly v. Martin, 120 S. C., 317. Union Pac. R. Co. v. Chicago, R. I. & P. R. Co., 163 U. S., 564; 41 L. Ed., 265. 25 R. C. L., 205. 36 Cyc., 570. This franchise contract was effectually accepted by the opera- tion of the company thereunder. No further formal acceptance was necessary. “No formal resolution of acceptance is necessary in any case,” said this Court in the City R. Co. v. Citizens St. Ry. Co., 166 U. S., 558; 41 L. Ed., 1114, “if the facts show an actual, practical acceptance by the company, or action which would be only explicable in case the amendment were ac- cepted” (p. 1118). In that case this Court further said with 56 Broap Rw. Pwr. Co., Erc., et al. uw State or S. C. regard to the effect of the company’s application for the pass- age of an ordinance: “This was sufficient, as it is universally held that a previous request for an ordinance obviates the necessity of a subsequent acceptance. Atlanta v. Gate City Gas- light Co., 71 Ga., 106; IMinois River R. Co. v. Zimmer, 20 IIl., 654; Lincoln & K. Bank v. Richardson, 1 Me., 79 (10 Am, Dec., 34); State, Carlton v. Dawson, 22 Ind., 272; Newton v. Carbery, 5 Cranch, C. C., 632; Perkins v. Sanders, 56 Miss., 732, 739; 1 Morawets, Priv. Corp., S. 23.” ‘ This franchise contract was necessarily binding on both par- ties at least for the 50 year term of the State charter franchise. The State charter had expressly given the primary franchise to operate in the City of Columbia for a period of fifty years “with consent of City Council.” This consent must, therefore, necessarily have been applied for and granted for the said 50 year term. This principle was applied in the case of Minneapolis v. Minneapolis Street Ry. Co., 215 U. S., 417, 54 L. Ed., 259, in which the Court held that the [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0398%3A11. Public record. Not legal advice.