Market Street Railway Co. v. Railroad Commission of California

Background

The dispute involves a private streetcar and bus company that operated in San Francisco and a state railroad commission. The Commission investigated and ordered the fare reduced from seven to six cents after hearings that examined service and finances. The company sought review in the California Supreme Court, obtained a stay by impounding the one-cent difference, and later sold its properties to the city. The appeal reached the U.S. Supreme Court; the timing of the appeal was also at issue because of state rehearing rules.

Reasoning

The Court addressed two questions: when the state judgment became final for appeal, and whether the commission’s six-cent order violated the Fourteenth Amendment. It held the judgment became final on denial of rehearing, so the first appeal was timely. On the merits the Court found the company had reasonable notice, that the record contained evidence supporting the commission’s findings, and that predictive estimates and limited use of the company’s own reports did not deny a fair hearing. The Court rejected the company’s claim that the rate was confiscatory under the Constitution.

Real world impact

The decision lets state regulators try temporary rate changes based on the record and experience, and it confirms that such experimental orders may be upheld if not shown to be confiscatory. It also clarifies that a state court decision is final for U.S. review when rehearing is denied, affecting the timing of appeals. Because the company sold its properties, the case remains important only for how impounded fares and similar procedural and constitutional issues are resolved in future rate disputes.