Railroad Commission v. Saline River Railway Co. , 119 Ark. 239 ( 1915 )

Hart, J.,

(1) (after stating the facts). The franchise rights and privileges of a railroad company are granted by the State in consideration of the resulting benefits to tbe public and tbeir acceptance by tbe railroad company imposed npon it tbe duty of operating the road, when 'constructed, and of doing so in tbe manner and for tbe purposes contemplated by its charter, -which duties it may be compelled to perform by mandamus or other proper proceedings. 33 Cyc. 635; see also cases cited in case notes to 33 Am. & Eng. Ann. Cas., p. 1256, and 50 L. R. A. (N. S.) 652.

In Atlantic Coast Line v. North Carolina Corporation Commission, 206 U. S. 1, the court said:

“The elementary proposition that railroads from tbe public nature of tbe business by them carried on and tbe interest which tbe public have in tbeir operation are subject, as to tbeir State business, to (State regulation, which may be exerted either directly by tbe legislative authority or by administrative bodies endowed with power to that end, is not ¡and ¡could not be successfully questioned in view of the long line of authorities sustaining that doctrine. ’ ’

Amendment No. 4 to our 'Constitution conferred upon the Legislature the right to create a railroad commission, and pursuant to that authority ¡an act was passed creating such a commission and ■ defining the duties thereof.

Section 6704 of Kirby’s Digest provides that it shall be the duty of every company operating a railroad in the State which runs passenger trains to fun at least one of its passenger trains each way daily.

(2-3) The plaintiff corporation was organized for the purpose of constructing, maintaining ¡and operating a railroad for the ¡conveyance of persons ¡and property. The franchise of the railroad company can only be exercised by the corporation operating its whole line of road.' The charter confers upon the incorporators the power to operate the road over a fixed line or lines and it can not abandon ¡a part of its line and continue to operate the balance under its charter. Its obligation to discharge the duties imposed by its charter must be construed in connection with the nature and productiveness of the corporate 'business as a whole, the character of the service required and the public need for its performance. For that reason its statutory duty to operate its road may be compelled, although by 'doing so, as an incident, some pecuniary loss may result from rendering such service. Missouri Pacific Ry. Co. v. Kansas, 216 U. S. 262.

(4) As we have already seen, our statute requires the railroad company to operate trains each way over it's line daily and penalties are provided for failure or refusal to obey that section of the act, or proper orders of the railroad 'commission. This brings us to the question of whether or not the order made by the railroad commission was so arbitrary or unreasonable as to be void for want of power to make it. St. Louis, I. M. & S. Rd. Co. v. Bellamy, 113 Ark. 384; St. Louis, I. M. & S. Rd. Co. v. State, 112 Ark. 147; La. & Ark. Rd. Co. v. State, 85 Ark. 12.

The fact, as above indicated, that the order made by the Railroad 'Commission was likely to cause pecuniary loss to the railroad company was not of itself sufficient to make the order arbitrary and unreasonable; but this fact was a circumstance to be considered in determining whether or not the order was arbitrary and unreasonable.

(5) In the case at bar the uncontroverted facts show that the cost of the construction and equipment of the railroad was $75,000 and that it now owns no property except its tracks and rolling stock; that the track is badly out of repair and that it would cost $5,000 to repair it so that passenger trains could be safely run over it; that the road now owes between $100,000 and $150,000; that it has made repeated efforts to sell its franchise and ■all its property for the sum of $18,00.0, which is the actual value of its rails and rolling stock; and that it has been unable to find a purchaser; that the actual cost of operating one train each way daily between Draughon and New Edinburg is fifty dollars and that the greatest amount of revenue which it can earn daily is not more than ten dollars.

The railroad company operated its trains from August, 1913, to some time in November of that year at this loss. This was at a season of the year when traffic over railroads in this State is usually heaviest. So, under the peculiar facts of this case, the track of the railroad is so short, and the business done by it so small that it would be unreasonable to require it to operate a train for freight and passengers. If the business done over the whole line of the road shows that to compel the operation of trains would be to entail a serious and continued loss,, it would be unreasonable to prescribe and demand it, and it would not be required.

The record shows that the railroad company has no means whatever with which to operate its line of road and is unable to procure any for that purpose. It can not even sell its road for the cost of its rails and rolling stock. The record does not show that this lack of means resulted from any mismanagement of the railroad.

(6) An order made by the Railroad Commission should only be issued in the interest of the public. Under the undisputed facts there is no probability that the railroad can be operated and the Railroad Commission should not make a vain and futile order. Such action on its part is arbitrary and unreasonable. See State of Kansas v. Dodge City, Montezuma & Trinidad Ry. Co. (Kan.), 24 L. R. A. 564; State of South Carolina v. Jack, Cir. Ct. of Appeals, 4th Circuit, 145 Fed. 281; Ohio, etc., Ry. Co. v. People, on Relation of Attorney General (Illinois), 11 N. E. 347; Elliott on Railroads 2d ed., vol. 2, Sec. 1056c.

(7-8) G-ranting the commission power to make orders does not necessarily take away the jurisdiction of the courts. As we have already seen, the orders of the Railroad Commission must be reasonable, and whether or not they are is a question for the courts to decide. The rule is that where a tribunal, such as a board of railway commissioners, exceeds its powers and issue® an .arbitrary .and unreasonable order, an injunction is a proper remedy to curb the abuse of power. The only difficulty in practically applying the rule is in determining whether the commission has exceeded its powers. Elliott on Railroads, 2d ed., vol 2, Sec. 705-6.

(9) There i® some testimony in the record tending to show that the officers of the railway company contemplate dismantling it. It does not follow that because we have held that the order of the Railroad Commission was arbitrary and oppressive, that the railroad company has a right to take up its rails and dispose of them on its own motion. In the case of Freeo Valley Railroad Co. v. Hodges, 105 Ark. 314, we held that since railroads are constructed for public use and the public has rights in them which should be protected, that railroad corporations are not authorized to abandon their roads and surrender their charters without the consent of the State.

(10) Under the facts disclosed in this ease, the Attorney General in an action of quo warranto might cause the charter of the company to be forfeited because the railroad company has abandoned the operation of its road. So, too, upon proper application a ¡court of equity could take charge of the affairs .and property of the railroad company by the appointment of a receiver. Thus, the court would be able to protect the rights of creditors and stockholders and to insure, as far as practicable, the discharge of the public function of the corporation. See Elliott on Railroads, 2d ed., vol. 1, sec 539.

From the views we have expressed it follows that the decree will be .affirmed.

Kirby, J., dissents.