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U.S. Supreme Court

City Railway Co. v. Citizens' Street R. Co., 166 U.S. 557 (1897)

City Railway Company v. Citizens' Street Railroad Company

No. 214

Argued March 16-17, 1897

Decided April 19, 1897

166 U.S. 557


The Citizens' Street Railway Company of Indianapolis was organized is 1864 under an act of the Legislature of Indiana of 1861 authorizing such a company to be " a body politic and corporation in perpetuity." January 18, 1864, the common council of that city passed an ordinance authorizing the company to lay tracks upon designated streets, and providing that "the right to operate said railway shall extend to the full time of thirty years," during which time the city authorities were not to extend to other companies privileges which would impair or destroy the rights

Page 166 U. S. 558

so granted. In April, 1880, the common council amended the original grant "so as to read thirty-seven years where the same now reads thirty years." The company, desiring to issue bonds to run for a longer period than the thirty years, had, for that purpose, petitioned the common council for an extension to forty-five years. The city government was willing to extend to thirty-seven years, and this was accepted by the company as a compromise. On the 23d of April, 1888, the road and franchises were sold and conveyed to the Citizens' Street Railroad Company, which sale and transfer were duly approved by the city government. December 18, 1889, a further ordinance authorized the use of electric power by the company and provided how it should be applied. In accordance with its provisions, the company, at great expense, built a powerhouse and changed its plant to an electric system. In April, 1893, the city council, claiming that the rights of the company would expire in thirty years from January 18, 1864, granted to another corporation called the City Railway Company the right to lay tracks to be operated by electricity in a large number of streets then occupied by the tracks of the Citizens' Street Railroad Company, whereupon a bill was filed in the circuit court of the United States by the Street Railroad Company against the City Railway Company to enjoin it from interrupting or disturbing the railroad company in the maintenance and operation of its car system, alleging that the action of the city council sought to impair, annul and destroy the obligation of the city's contract with the plaintiff.


(1) That the Circuit Court had jurisdiction, although both parties were corporations and citizens of Indiana.

(2) That the right of repeal reserved to the legislature in the act of 1861 was not delegated to the city government.

(3) That the circumstances connected with the passage of the amended ordinance of April 7, 1880, operated to estop the city from denying that the charter was extended to thirty-seven years.

(4) That the continued operation of the road was a sufficient consideration for the extension of the franchise.

(5) That the Citizens' company had a valid contract with the city which would not expire until January 18, 1901, and that the contract of April 24, 1893, with the City Railway Company was invalid.

(6) But no opinion was expressed whether complainant was entitled to a perpetual franchise from the city.

This was a bill in equity by the Citizens Street Railroad Company to enjoin the appellant from interrupting or disturbing complainant in the construction, operation, and maintenance of its street car system in the City of Indianapolis, and for the establishment of complainant's rights, and the quieting of its title in that connection.

The facts of the case are substantially as follows: in 1861,

Page 166 U. S. 559

the General Assembly of the State of Indiana passed an act authorizing the incorporation of street railway companies, the second section of which act provided that the stockholders in such companies and their successors should be "a body politic and corporate in perpetuity, by the name stated in the articles of association," and the eleventh and twelfth sections which were as follows:

"SEC. 11. This act may be amended or repealed at the discretion of the legislature."

"SEC. 12. Nothing in this act contained shall be so construed as to take away from the common councils of incorporated cities the exclusive powers now exercised over the streets, highways, alleys and bridges within the corporate limits of such cities, and all street railroad companies which may be organized under the provisions of this act shall first obtain the consent of such common council to the location, survey and construction of any street railroad through or across the public streets of any city before the construction of the same shall be commenced."

Pursuant to this act, the Citizens' Street Railway Company was organized January 15, 1864, and on January 18, 1864, the Common Council of Indianapolis passed an ordinance, the first, third, and fifteenth sections of which contained the following:

"SECTION 1. Be it ordained by the Common Council of the City of Indianapolis that under and by virtue of an act of the General Assembly of State of Indiana entitled 'An act to provide for the incorporation of street railroad companies,' approved June 4, 1861, and by virtue of the powers and authority of the common council otherwise by law vested, consent, permission, and authority are hereby given, granted, and duly vested unto the company organized with R. B. Catherwood as President, a body politic and corporate by the name of the Citizens' Street Railway Company of Indianapolis, and their successors, to lay a single or double track for passenger railway lines, with all the necessary and convenient tracks for turnouts, side tracks, and switches, in, upon, and along the course of the streets and alleys of the City of Indianapolis hereinafter mentioned, and to keep, maintain, use,

Page 166 U. S. 560

and operate thereon railway cars and carriages in the manner and for the time and upon the conditions hereinafter prescribed."

"SEC. 3. The cars to be used on such tracks shall be operated with animal power only. . . ."

"SEC. 15. The right to operate said railway shall extend to the full time of thirty years from the passage hereof, and the said City of Indianapolis shall not, during all the time to which the privileges hereby granted to said company shall extend, grant to or confer upon any person or corporation any privilege which will impair or destroy the rights and privileges herein granted to the said company. . . ."

The second section of this ordinance named certain streets upon which the company was authorized to lay its tracks, and in the following year (1865), a supplemental ordinance was passed giving to the company the right to lay its tracks upon all the streets or roads within the the corporate limits of the city, and providing, in section 4, "that in laying, constructing and operating" the same the company should be governed by the provisions of the ordinance of January 18, 1864.

The Citizens' Street Railway Company constructed and operated its plant until April 23, 1888, when it was sold and conveyed to the complainant, the Citizens' Street Railroad Company.

On April 7, 1880, the common council passed another ordinance supplemental to that of 1864, providing that section 15 of that ordinance should be amended so as "to read thirty-seven years, where same now reads thirty."

On April 23, 1888, an ordinance was passed approving the sale and transfer of the railway company to the railroad company, and on December 18, 1889, a further ordinance was passed, supplementary to that of January 18, 1864, authorizing the use of electric power, and providing the manner in which it should be applied. This ordinance was formally accepted by the railroad company on January 4, 1890. The company thereupon proceeded at very great expense to build a power house, and change its plant to an electric system.

In 1893, a dispute arose between the board of public works

Page 166 U. S. 561

of the city and the President and directors of the complainant over the question whether complainant's franchise would expire on January 18, 1894 -- 30 years from its date.

On February 6, 1893, a further ordinance was passed, declaring it to be unlawful for any person or corporation to cut or dig into a paved street without first obtaining from the board of public works a written permit so to do.

On April 24, 1893, pursuant to an act of the General Assembly of the state, quoted in the opinion, the city, through its board of public works, entered into contract with the defendant -- the City Railway Company -- giving it permission to lay its tracks for street railway lines to be operated by electricity, or other improved power, through a large number of streets, most of which were already occupied by the lines of the complainant company. This contract was approved upon the same day be the common council, and was accepted by the defendant.

The bill a averred that it was impossible that electric cars other than complainant's could be operated on such streets without their practical destruction as thoroughfares for public travel. It further set forth certain acts on the part of the city, which are alleged to be part of plan of the city authorities, in combination with the defendant, to prevent it from making extensions and improvements and from operating its lines of railway, and that they, the city and the defendant, were asserting the right of the city to disregard and set aside, by the exercise of the legislative power conferred upon its common council by the legislature of the state in the charter of 1891, a contract duly entered into and existing between the state and the complainant under its charter, and between the city and the complainant, thereby seeking to impair, annul, and destroy the obligation of such contracts, in violation of the Constitution of the United States. This bill was filed on May 11, 1893, within a month after the contract and ordinance of April 24th.

A motion was made to dismiss the bill upon the ground of the want of jurisdiction in the circuit court, which was denied. 56 F.7d 6. The bill was subsequently amended, and

Page 166 U. S. 562

the case, being put at issue upon an answer and replication, came on to be heard upon the pleadings and proofs, and resulted in a decree in accordance with the prayer of the bill and the opinion of the presiding judge, forever enjoining the defendant from disturbing the complainant in the enjoyment of its rights to the streets occupied by it at the time of the commencement of the suit. and declaring the contract and ordinance of April 24, 1893, to be void, insofar as they attempted to confer upon the defendant company any right to the streets occupied by the complainant at the commencement of the suit. 64 F.6d 7. From this decree an appeal was taken to this Court.

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