Morris v. Atlanta Northern Railway Co.

Buck, P. J.

(After stating the foregoing facts.)

In view of the allegations of the petition and the prayers for injunction against any attempt in the future to discontinue service upon the road of the defendant company and any attempt to dismantle the road in the future, and in view of the terms, stipulations, and conditions upon which the service on the road in question was resumed, this court is of the opinion that the questions involved in the case are not moot, but must be decided.

Under the evidence submitted at the hearing by the defendant, which was admitted without objection, and which was not controverted by any testimony offered by the plaintiffs, the court was authorized to find that the railroad in question had been operated by the defendant since its inception, that is, for the period of about twenty years, at a loss, and that under existing conditions, over which the corporation had no control and could not change, its continued operation could only result in continued and increasing loss to the owners and stockholders of the road; and the controlling question is therefore presented to the court, whether, under such circumstances, the defendant without having previously surrendered its franchise and charter which had been granted by the Secretary of State, could discontinue the operation of the road and the business of hauling freight and passengers for hire. It is not necessary to enter upon an extended discussion of the question presented. This important question involved here has been considered and determined b.y the Supreme Court of the United States in cases involving issues and questions which render the decision by that tribunal binding and conclusive upon this court.

In the case of Brooks-Scanlon Co. v. Railroad Commission of La., 251 U. S. 396 (40 Sup. Ct. 183), the Supreme Court of the United States held: “A carrier can not be compelled to. carry on even a branch of business at a loss, much less the whole business of carriage. On this point it is enough to refer to Northern Pacific Ry. Co. v. North Dakota, 236 U. S. 585, 595, 599, 600, 604, and Norfolk & Western Ry. Co. v. West Virginia, 236 U. S. 605, 609, 614. It 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 fulfil an obligation imposed by the charter, even though fulfilment in that particular may cause a loss. Missouri Pacific Ry. Co. v. Kansas, 216 U. S. 262, 276, 278. But that special rule is far from throwing any doubt upon a general principle too well established to need further argument here. The plaintiff may be making money from its sawmill and lumber business, but it no more can he compelled to spend that than it can be compelled to spend any other money to maintain a railroad for the benefit of others who do not care to pay for it. If the plaintiff be taken to have granted to the public an interest in the use of the railroad, it may withdraw its grant by discontinuing the use when that use can be kept up only at a loss. Munn v. Illinois, 94 U. S. 113, 126.”

In the case, of Erie R. Co. v. Board of Public Utility Commissioners, 254 U. S. 394 (41 Sup. Ct. 169), the same court held that a railroad corporation- can be made, at its own expense and at whatever cost, to abolish highway crossings, including those at streets laid out after the railway was built, and it was insisted in that case that if the same requirements were made for all the grade crossings on the road it would soon be bankrupt; and in the decision it was said: “That the States might be so foolish as to kill a goose that lays golden eggs for them, has no bearing on their constitutional rights. If it reasonably can be said that safety requires the change, it is for them to say whether they will insist upon it, and neither prospective bankruptcy nor engagement in interstate commerce can take away this fundamental right of the sovereign of the soil.” But that court held further that “If the burdens imposed are so great that the road can not be run at a profit, it can stop, whatever the misfortunes the stopping may produce;” and cited the case of Brooks-Scanlon Co.' v. B. B. Com., supra.

It was held in the case of Bullock v. Railroad Commission of Florida, 254 U. S. 513, 520 (41 Sup. Ct. 193): “Apart from statute or express contract, people who have put their money into a railroad are not bound to go on with it at a loss if there is no reasonable prospect of profitable operation in the future. Brooks-Scanlon Co. v. R. R. Commission of Louisiana, 251 U. S. 396. No implied contract that they will do so can be elicited from the mere fact that they have accepted a charter from the State and have been allowed to exercise the power of eminent domain. Suppose that a railroad company should find that its road was a failure, it could not make the State a party to a proceeding for leave to stop, and whether the State would proceed would be for the State to decide. The only remedy of the company would be to stop, and that it would have a right to do without the consent of the State if the facts were as supposed. Purchasers of the road by foreclosure would have the same right.”

On February 18, 1925, the Supreme Court of the United States decided the case of Railroad Commission of Texas v. Eastern Texas R. Co., and the case of State of Texas v. Eastern Texas R. Co., 264 U. S. 79. Those cases were appealed from two decrees in the district court; the first awarding a permanent injunction in the railroad company’s suit brought in that court to restrain the railroad commission of Texas and others from interfering with its right to abandon operation and dismantle and salvage its property; the second dismissing a bill to restrain such abandonment, etc., brought by the State in a court of the State and removed to the district court. The decrees in both cases were affirmed. In that case it was insisted by counsel for appellants that the Eastern Texas Bailroad Company was under contract to maintain and operate its railroad continuously for the term of its charter, and the company was under statutory duty to maintain and operate its railroad during the term of its charter, and that the Federal courts usually follow the State court in arriving at the contract and statutory obligations existing between a State and its corporations; and the decisions from the Supreme Court of Texas were cited to sustain the position of counsel in this case. It was expressly insisted that the fourteenth amendment, preventing an unconstitutional taking of property, is .not available to a railroad company seeking to escape a contract and statutory duty to continue operation and maintenance of its lines of railroad even at a loss. In deciding those two cases it was held by the court: “The usual permissive charter of a railroad company does not give rise to any obligation on the part of the company to operate its road at a loss. No contract that it will do so can be elicited from the acceptance of the charter or from putting the road in operation. The company, although devoting its property to the use of the public, does not do so irrevocably or absolutely, but on condition that the public shall supply sufficient traffic on a reasonable rate basis to yield a fair return. And if at any time it develops with reasonable certainty that future operation must be at a loss, the company may discontinue operation and get what it can out of the property by dismantling the road. To compel it' to go on at a loss or to give up the salvage value would be to take its property without the just compensation which is a part of due process of law. The controlling principle is the same that is applied in the many cases in which the constitutionality of a rate is held to depend upon whether it yields a fair return. Brooks-Scanlon Co. v. Railroad Commission of Louisiana, 251 U. S. 396, 399; Bullock v. Railroad Commission of Florida, 254 U. S. 513, 520; State ex rel. Cunningham v. Jack, 113 Fed. 823, s. c. 145 Fed. 281; Iowa v. Old Colony Trust Co., 215 Fed. 307, 312; Northern Pacific R. R. Co. v. Dustin, 142 U. S. 492, 499; Commonwealth v. Fitchburg R. R. Co., 12 Gray, 180, 190; State v. Dodge City etc. Ry. Co., 53 Kan. 329, 336.” This last-quoted case is a direct ruling upon the identical question which we have before us, and upon a question involving the construction of certain provisions found in the constitution of the United States; and its ruling upon those questions is of course controlling upon us.

There can be found dicta in certain of the eases decided by this court which may be construed as laying down a different doctrine, but that the decisions of the Supreme Court of the United States are controlling upon us in regard to questions here for decision has been recognized in a recent decision by this court. In the case of Coffee v. Gray, 158 Ga. 218 (122 S. E. 681), it was held: “To require a railroad company to continue in business at a loss is beyond the' power of Congress or a State. ‘Apart from statute or express contract; people who have put their money into a railroad are not bound to go on with it at a loss, if there is no reasonable prospect of profitable operation in the future' Bullock v. Florida, 254 U. S. 513 (41 Sup. Ct. 193, 65 L. ed. 380); Brooks-Scanlon. Co. v. Railroad Commission, 251 U. S. 396 (40 Sup. Ct. 183, 64 L. ed. 323). Nor can a railroad company or a receiver of such company be required to operate a railway on a scale of wages which produce continual loss, and which will finally eat up the corpus of the property. Under our constitutional system of government, there is no power in or out of Congress, in a State, or in the judiciary to compel those who devote their property to the use of the public to operate the same at rates or wages which occasion loss.”

Most of the cases which counsel for plaintiffs in error have cited to support their position, and which apparently announce doctrines contrary to what we have held in this case, 'are distinguishable upon their facts and the issues involved from those cases in which the Supreme Court of the United States has announced the doctrine that we regard as controlling here. We do not deem it necessary to take up these cases in detail and analyze them. Among the cases cited by counsel for plaintiffs in error is that of Ft. Smith Light & Traction Co. v. Bourland, decided March 2, 1925, 45 Supreme Court Reporter 249. From the statement of facts in that case it appears that the Ft. Smith Light & Traction Co. owned and operated in that city a street-railway system with twenty-two miles of line; included in that system was a line extending for a third of a mile on Greenwood Avenue. Under the law of Arkansas a street railway is not permitted to abandon any part of its line without leave of the city commission which exercises the power of a public-utility commission. The company applied to that board for leave to abandon the line on Greenwood Avenue, because it was and would be unremunerative. The request to abandon the Greenwood Avenue line was denied, and suit was then brought in a court of the State to set aside the order, on the ground, among others, that it deprived the company of its property in violation of the due-process clause of the fourteenth amendment. The- trial court denied the relief sought, and the ease was finally carried to the Supreme Court of the United States. It was in that case that the court used the language which counsel for plaintiffs in error insist lays down a doctrine that is controlling in the instant case. We think the difference between that case and the present one is at once apparent; for it will be at once seen that the street-railway company was seeking to discontinue merely the operation of a part of its line, while retaining and operating all the remainder of the street-railway system within the municipality. It was upon the issues thus made that the court decided adversely to the Ft. Smith Light & Traction Company, and said, in'reference to the issue presented by the record: “The Greenwood Avenue line had been in operation nearly 20 years. No change in conditions had supervened which required the commission to permit the abandonment, unless it were the fact that this particular part of the system was being operated at a loss; that continued operation would involve practical rebuilding of that part of the line; that such rebuilding would entail a large expenditure; and that the system as a whole was not earning a fair return upon the value of the property used and useful in. the business. The order complained of does not deal with rates. Nor does it involve the question of the reasonableness of service over a particular line. Compare Atlantic Coast Line R. R. Co. v. Corporation Commission, 206 U. S. 1, 23-27, 27 S. Ct. 585, 51 L. ed. 933, 11 Ann. Cas. 398; Railroad Commission v. Mobile & Ohio R. R. Co., 244 U. S. 388, 37 S. Ct. 602, 61 L. ed. 1216. It merely requires continued operation. We can not say that it is inherently arbitrary. A public utility can not, because of loss, escape obligations voluntarily assumed. Milwaukee Electric Ry. Co. v. Milwaukee, 252 U. S. 100, 105, 40 S. Ct. 306, 64 L. ed. 476, 10 A. L. R. 892. The fact that the company must make a large expenditure in relaying its track does not render the order void. Nor does the expected deficit from operation affect its validity. A railway may be compelled to continue the service of a branch or part of a line, although the operation involves a loss. Missouri Pacific Ry. Co. v. Kansas, 216 U. S. 202, 279, 30. S. Ct. 330, 54 L. ed. 472; Chesapeake & Ohio Ry. Co. v. Public Service Commission, 242 U. S. 603, 607, 37 S. Ct. 234, 61 L. ed. 520. Compare Railroad Commission v. Eastern Texas R. R. Co., 264 U. S. 79, 85, 44 S. Ct. 247, 68 L. ed. 569. This is true even where the system as a whole fails to earn a fair return upon the value of the property. So far as appears, this company is at liberty to surrender its franchise and discontinue operations throughout the city. It can not, in the absence of contract, be compelled to continue to operate its system at a loss. Brooks-Scanlon Co. v. Railroad Commission of Louisiana, 251 U. S. 396, 40 S. Ct. 183, 64 L. ed. 323. But the constitution does not confer upon the company the right to continue to enjoy the franchise and escape from the burdens incident to its use.”

We have made this lengthy quotation from the decision in the case last referred to, because counsel for plaintiffs in error have urged it as a controlling opinion from the Supreme Court of the United States; but when we examine the holdings of the court in view of the issues presented, we see that it is not applicable to the case in hand, while other decisions from the same court, which we have cited and quoted above, do cover the question with which we have to deal in this record. And what we have said in regard to the opinion in the ease of the Light & Traction Company v. Bourland is applicable also to the case of Macon Ry. &c. Co. v. Corbin, 155 Ga. 197 (116 S. E. 305).

If the defendant company had discontinued the operation of a part of its line and dismantled the same or was threatening so to do, a different question would arise, and the rulings made in the case of Ft. Smith Light & Traction Co. v. Bourland, supra, and the case of Macon Railway v. Corbin, supra, would be applicable.

It follows from what we have said above that the court did not err in denying the prayer for injunction and receiver.

Judgment affirmed.

All the-Justices concur.