Detroit United Railway v. City of Detroit

Background

The dispute involves a private company that owns a system of street railways in the city of Detroit and nearby suburbs, and the city government and its officials. The company sued to stop the city from building and running its own municipal street railway system and from issuing $15,000,000 in bonds after voters approved an ordinance at a special election. The company argued the vote was invalid and that the city’s actions would take its property without due process of law (the Constitution’s protection against unfair government takings).

Reasoning

The Court reviewed prior rulings and the city charter and found the city had legal authority to submit the proposal, issue bonds with voter approval, and pursue municipal ownership. The Court said the company’s expired franchises did not give it permanent street rights; short-term permits were revocable and a prior ordinance and temporary court decree did not create lasting property rights. The Court also relied on the State constitution’s requirement that certain municipal grants need a three-fifths voter approval, and the city charter’s rule that purchases require voter approval. Allegations that officials misled voters or sought to buy the property cheaply did not invalidate a properly conducted election.

Real world impact

The ruling lets Detroit proceed with its municipal street railway plans and bond financing. It limits a private railway’s ability to block municipal takeover through federal due-process claims and emphasizes that completed local elections cannot be overturned in collateral suits challenging officials’ motives. The decision affirms reliance on local voter approval rules.