Milwaukee Electric Railway & Light Co. v. Railroad Commission
Headline: Court upholds state authority to cut streetcar ticket-package rates, allowing a state railroad commission to reduce fare packages despite a city's ordinance and the railway company's contract claim.
Holding:
- Lets state regulators change fare packages despite municipal ordinances absent clear statutory surrender of power.
- Makes municipal ordinances insufficient to block state rate regulation unless the statute is unmistakably explicit.
- Limits street railway companies’ ability to rely on city-accepted fare contracts against state commissions.
Summary
Background
A Wisconsin street railway company that ran lines in Milwaukee relied on a 1900 city ordinance it accepted. The ordinance set a five-cent cash fare and authorized sale of ticket packages (twenty-five for one dollar, six for twenty-five cents) with time limits and later all-day privileges through 1934. The City later asked the state Railroad Commission to lower certain fares; the Commission ordered discontinuance of the twenty-five-for-one-dollar package and required acceptance of a thirteen-for-fifty-cent package, while leaving the five-cent cash fare unchanged. The company sued in state court to block the Commission, claiming the ordinance acceptance created an irrevocable contract; state courts dismissed the suit and the Wisconsin Supreme Court affirmed.
Reasoning
The key question was whether the city’s ordinance and state statutes made a binding, unchangeable contract that would prevent the State from later regulating fares. The Court examined the state statute (§1862) that lets municipalities grant use of streets “upon such terms as the proper authorities shall determine,” and concluded that it did not clearly show an intent to let cities surrender the State’s sovereign power to set fares. The Court emphasized that giving up such a sovereign power must be shown in unmistakable terms. Relying on the Wisconsin court’s interpretation and prior federal decisions, the Court held the State retained the authority to regulate rates and upheld the Commission’s order.
Real world impact
The decision means state regulators may change packaged fare schemes despite prior municipal ordinances unless the legislature unmistakably authorized cities to make irrevocable rate contracts. Street railway companies in similar positions cannot assume municipal acceptance alone blocks later state action. The ruling resolves the company’s federal constitutional claim and allows the Commission’s order to stand.
Dissents or concurrances
Two Wisconsin judges dissented, arguing the city’s ordinance created a binding, irrepealable contract that the later Commission action unlawfully impaired and took the company’s property without due process.
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