City of Minneapolis v. Minneapolis Street Railway Co.

Background

A street railway company organized July 1, 1873, says it has a fifty‑year contract with the city of Minneapolis fixing fares at no more than five cents for a single continuous trip. That contract traces to a city ordinance of July 9, 1875, which the Minnesota Legislature ratified on March 4, 1879. In 1907 the city passed an ordinance requiring the company to sell six tickets for twenty‑five cents. The railway sued, and a federal circuit court enjoined the city from enforcing the 1907 ordinance.

Reasoning

The core question was whether the earlier ordinance and the legislative ratification created a binding contract that the city could not later impair. The Court found the company had organized under the law that allows fifty‑year charters and that the city’s 1875 ordinance, accepted by the company and later validated by the State, created a contract limiting fares to five cents for one continuous trip. The Court rejected the city’s arguments that corporate duration or later ordinances (including a 1890 ordinance allowing electrical operation) ended that contract. It held the 1907 six‑for‑25¢ requirement impaired the existing contract and therefore was invalid as applied to the company. The Court affirmed the injunction but modified the lower court’s decree to limit the judgment to preventing reduction of the fare below five cents for one continuous passage within the fifty‑year contract term.

Real world impact

The ruling prevents Minneapolis from enforcing the 1907 ticket rule against this company and preserves the company’s right to charge five cents for a continuous trip under its fifty‑year contract. The city remains free to regulate other operational matters not inconsistent with that contract.