Durham Public Service Company v. City of Durham/Opinion of the Court

As the cause is properly here upon writ of error-Atlantic Coast Line v. Goldsboro, 232 U.S. 548, 555, 34 Sup. Ct. 364, 58 L. Ed. 721; Act September 6, 1916, 39 Stat. 726 (Comp. St. § 1214) we deny the petition for certiorari.

Plaintiff in error was incorporated by the Legislature of North Carolina in 1901 (Priv. Laws 1901, c. 25) and empowered to operate car lines in the streets of Durham when so authorized by the municipal authorities. Shortly thereafter and in pursuance of an agreement they granted the necessary authority. The Supreme Court of North Carolina (Durham v. Durham Public Service Co., 182 N. C. 333, 109 S. E. 40) affirmed a judgment of the superior court which sustained an assessment of $102,942.30 made in 1920 against the corporation for the cost of paving that portion of Main street occupied by its tracks. It refused to make the improvement as required by an ordinance; thereupon the city caused the work to be done and assessed the cost against it. The formality of the proceeding is not questioned.

Recovery is resisted upon two grounds: (1) That the original contract under which the railway lines were constructed and operated exempts and corporation from liability to pave the roadbed. Constitution, § 10, art. 1. (2) That the assessment is excessive, unreasonable and wholly arbitrary and to enforce it would deprive plaintiff in error of property without due process of law and deny it the equal protection of the laws, contrary to the Fourteenth Amendment.

The original contract with the city is dated February 4, 1901, and the claim of exemption rests upon the following clause therein:

'The said Durham Traction Company [now the Durham Public     Service Company] whenever it shall be required so to do,      shall cause its roadbed and track to be brought to surface      grade at its own expense and costs, but nothing herein      contained shall be construed to require said Durham Traction      Company to pave its roadbed, but it shall be required to      restore the roadbed to the condition in which it was it the      time of laying said track, provided, however, that if the      said city decides to put in or change its sewerage pipes on      any of the streets of said city on which the tracks of said      Durham Traction Company may be laid, the said city may      require the said Durh m Traction Company to remove and      replace at its own expense, the said tracks, for said      purpose, and said city shall incur no liability for any      delays or interruptions of the business or traffic of the      said Durham Traction Company, caused thereby.'

The court below held that while this contract imposes no liability for paving, neither does it grant exemption therefrom. And we agree with their conclusion. Such exemptions must plainly appear. The general rule is that doubts as to provisions in respect of them must be resolved in favor of the municipality or state. Cleveland Electric Ry. Co. v. Cleveland, 204 U.S. 116, 130, 27 Sup. Ct. 202, 51 L. Ed. 399.

Purporting to proceed under 'An act relating to local improvements in municipalities,' ratified by the General Assembly of North Carolina, February 27, 1915-chapter 56-the governing body of Durham by resolution provided for improving Main street and directed plaintiff in error to pave between and for 18 inches outside its tracks. The company refused to comply and the challenged assessment followed. Among other things the act of 1915 provides:

'Sec. 4. Every municipality shall have power, by resolution     of its governing body, upon petition made as provided in the      next succeeding section, to cause local improvements to be      made and to defray the expense of such improvements by local      assessment, by general taxation, and by borrowing, as herein      provided. * *  *

'Sec. 6. * *  * If the resolution shall provide for a street      improvement, it shall direct that any street railway company      or other railroad company having tracks on the street or      streets or part thereof to be improved shall make such street      improvement with such material and of such a character as may      be approved by the governing body, in that part of such      street or streets or part thereof which the governing body      may prescribe, not to exceed, however, the space between the      tracks, the rails of the tracks, and eighteen inches in width      outside of the tracks of such company, and that unless such      improvement shall be made on or before a day specified in      such resolution, the governing body will cause such      improvement to be made: Provided, however, that where any      such company shall occupy such street or streets under a      franchise or contract which otherwise provided, such franchise or contract shall not be      affected by this act, except in so far as this act may be      consistent with the provisions of such franchise or contract. * *  * '

By agreement of parties, the cause was tried without a jury and the court found the facts. Those so found and presently relied upon to show the arbitrary and unreasonable character of the assessment follow:

That the section of Main street over which the assessment     extends is 2.02 miles in length and including double tracks      there are 2.65 miles of track on Main street; that there are      154 abutting property owners upon this portion of Main      street; that the assessment against said company for paving      Main street is $102,942.30 and against said 154 property      owners is $89,909.56; that the value of the property of this      defendant on Main street within the area which is directly      affected by said paving is $100,000 and the assessed value of      said abutting property is approximately $5,083,250 exclusive      of the value of property on Main street not taxed.

That the cost to the Traction Company of furnishing new rails     and new cross-ties, of taking up and relaying its track on      Main street and doing other work preparatory to the placing      of the pavement upon Main street was $75,108.85, which has      been paid by the Traction Company and which said outlay and      expenditure was made at the order of the city of Durham; that      during the twelve months ending May 31, 1921, the company's      railway showed a loss of $17,388.73 of meeting the operating      expense and allowance for depreciation and if the company is      required to pay the paving assessment of the city of Durham      as demanded, to wit, one-tenth of said assessment each year,      with interest, then there will be an addition l expense of      one-tenth of $102,942.30 plus interest and depreciation on      same; that the gross earnings of said company from all      sources for the year ending December 31, 1920, were approximately $540,000, the net earnings      $147,000, the company having other valuable property and      business not on Main street, including other railway not on      Main street.

The court below held the recited facts insufficient to show that the municipal authorities acted unreasonably or arbitrarily, and we are unable to say that this was error. Counsel concede that the Constitution of North Carolina reserves to the Legislature power to alter or repeal corporate charters; also that, in general, the Legislature either directly or through recognized governmental agencies may impose assessments for local improvements and prescribe the basis of apportionment. But the claim is that the Legislature undertook arbitrarily to direct plaintiff in error to pave more than one-third of the street, while the owners of more valuable property fronting thereon are required to pay out much less and are assessed upon the front-foot basis.

Gast Realty & Investment Co. v. Schneider Granite Co., 240 U.S. 55, 36 Sup. Ct. 254, 60 L. Ed. 523; Hancock v. City of Muskogee, 250 U.S. 454, 39 Sup. Ct. 528, 63 L. Ed. 1081; and Kansas City Southern Ry. Co. v. Road Improvement District, 256 U.S. 658, 41 Sup. Ct. 604, 65 L. Ed. 1151-are cited in support of this insistence; but they do not go so far. The power of the Legislature to make reasonable classifications and to impose a different burden upon the several classes cannot be denied. There are obvious reasons for imposing peculiar obligations upon a railway in respect of streets occupied by its tracks. The facts and circumstances disclosed by the present record are not sufficient to justify us in overruling the judgment of the state court, which held that the assessment was not the result of arbitrary or wholly unreasonable legislative action. Sioux City Street Ry. Co. v. Sioux City, 138 U.S. 98, 107, 108, 11 Sup. Ct. 226, 34 L. Ed. 898; Fair Haven & Westville Ry. Co. v. New Haven, 203 U.S. 379, 388, 389, 27 Sup. Ct. 74, 51 L. Ed. 237; Southern Wisconsin Ry. Co. v. Madison, 240 U.S. 457, 461, 36 Sup. Ct. 400, 60 L. Ed. 739; Great Northern Ry. Co. v. Clara City, 246 U.S. 434, 436, 437, 38 Sup. Ct. 346, 62 L. Ed. 817; Pacific Gas & Elec. Co. v. Police Court, 251 U.S. 22, 25, 26, 40 Sup. Ct. 79, 64 L. Ed. 112; Milwaukee Elec. Ry. Co. v. Milwaukee, 252 U.S. 100, 104, 40 Sup. Ct. 306, 64 L. Ed. 476, 10 A. L. R. 892.

Affirmed.