Argument for Plaintiff in Error in Nos. 33, 34. 254 U. S.

public, and cannot consider the financial ability of the railroad to do the work required by the order, the statute might as well have stated that every grade crossing must be eliminated, as every crossing, in the very nature of things, is to some extent dangerous to public safety and to some extent impedes public travel.

We submit that these are not reasonable standards upon which the action of an administrative body is to be based, and that, if this be the proper construction, the statute deprives plaintiff in error of its property without due process of law.

If it is permissive, it deprives plaintiff in error of the equal protection of the laws. If the view of the state courts, that plaintiff in error is not concerned about the construction of the statute on this point, is correct, we further submit that the evidence in the present record shows that the action of the board was unreasonable and arbitrary, because it appears, without dispute that plaintiff in error did not have the financial ability to comply with the order, and hence, if we assume, for the purpose of argument, that the statute is valid, as against the objections stated above, the question still remains whether the present order can be sustained.

Discussing: Cattaragus Board of Trade v. Erie R. R. Co., N. Y. Pub. Serv. Comm., December 2, 1914; St. Johnsbury v. Boston & Maine R. R. Co., Vermont Pub. Serv. Comm., P. U. Rep., 1915 A, p. 641; Maryland Pub. Serv. Comm., December 16, 1912, Reports, 1912; Report of Pub. Util. Commrs. of Connecticut, 1912, p. xlvii; Iowa Board of Railroad Commrs., Report 1913, p. 43; Erie R. R. Co. v. Board of Public Utility Commrs., Supreme Court of New Jersey, April, 1915 (not reported); Houston &c. R. R. Co. v. Dallas, 98 Texas, 396; Northern Central Ry. Company's Appeal, 103 Pa. St. 621; Pennsylvania &c. R. R. v. Philadelphia & Reading R. R., 160 Pa. St. 277; Cleveland &c. Ry. Co. v. State Public Utilities Comm.,


Argument for Plaintiff in Error in Nos. 33, 34.

273 Illinois, 210; Connecticut Co. v. Stamford, 95 Connecticut, 26; Chicago & Northwestern Ry. Co. v. Ochs, 249 U. S. 416.

The foregoing authorities show that the element of expense is an important one; if it is found to be unreasonable under the circumstances of the particular case, that fact will usually suffice to demonstrate that the order is arbitrary. See also Chicago &c. Ry. Co. v. Minneapolis, 238 Fed. Rep. 384; Health Department v. Trinity Church, 145 N. Y. 32.

The order was unreasonable and arbitrary and therefore violates the due process clause because plaintiff in error was not given the alternative of reducing or eliminating the alleged danger to public safety and the alleged impairment to public travel by decreasing the number of train movements or by abandoning the railroad.

The general rule that, where a railroad has been constructed and put in operation, the company has no right to abandon the enterprise or cease to operate, does not go to the extent of requiring the continuance of operation at a loss, unless a statute expressly so provides. Jack v. Williams, 113 Fed. Rep. 823; affd. 145 Fed. Rep. 281; Iowa v. Old Colony Trust Co., 215 Fed. Rep. 307; Northern Pacific R. R. Co. v. Dustin, 142 U. S. 492; Amesbury v. Citizens Electric Ry. Co., 199 Massachusetts, 394; Sherwood v. Atlantic &c. Ry. Co., 94 Virginia, 291; Mississippi R. R. Commission v. Mobile & Ohio R. R. Co., 244 U. S. 388; Chicago &c. Ry. Co. v. Minneapolis, 238 Fed. Rep. 384.

If the company has no legal power to abandon the railroad no matter how great the loss, it should at least be given the alternative of decreasing the alleged danger and impediment by decreasing the number of train movements, especially when it proposes a reasonable and practicable scheme therefor which would greatly improve the train service to and from Paterson and would result

Argument for Plaintiff in Error in Nos. 33, 34. 254 U.S.

in a saving of at least half (and probably more) of the great burden imposed upon it by the order.

In so far as the order requires plaintiff in error to make certain changes in the properties of the Street Railway Company and in so far as it limits the proportion of the expense to be paid by the Street Railway Company to certain of the crossings to be eliminated, the order violates the due process clause for the reason that it takes the property of plaintiff in error for the use of the Street Railway Company.

The order impairs the obligation of the contracts between the plaintiff in error and the respective owners or lessees of side tracks. If construed to require the plaintiff in error to relocate or reconstruct side tracks (either on or off its right of way), at its own expense, it deprives the plaintiff in error of property, without due process of law. If not so construed, it deprives the owners or lessees of side tracks of their property, without due process of law. Citing: Missouri Pacific Ry. Co. v. Nebraska, 164 U. S. 403; Missouri Pacific Ry. Co. v. Nebraska, 217 U. S. 196; Oregon R. R. & Navigation Co. v. Fairchild, 224 U. S. 510; Union Lime Co. v. Chicago & Northwestern Ry. Co., 233 U. S. 211; Tap Line Cases, 234 U. S. 1; Northern Pacific Ry. Co. v. North Dakota, 236 U. S. 585; Great Northern Ry. Co. v. Minnesota, 238 U. S. 340; Seaboard Air Line Ry. Co. v. Railroad Commission of Georgia, 240 U. S. 324; Chicago & Northwestern Ry. Co. v. Ochs, 249 U. S. 416; Lake Erie & Western R. R. Co. v. Public Utilities Commission, 249 U. S. 422, and other cases.

The case is not like that where there is a custom to construct and maintain side tracks for the benefit of industries that may adjoin the main line tracks. Here we have express written agreements. In this respect, the case differs from Armour v. N. Y., N. H. & H. R. R. Co., 41 R. I. 361. It is more like American Malleables Co. v. Bloomfield, 83 N. J. L. 728.


Argument for Plaintiff in Error in Nos. 33, 34.

We do not question the general rule that in the reasonable exercise of the police power contracts may be impaired or even canceled.

Under the various statutes and leases by virtue of which plaintiff in error runs trains through Paterson over the tracks of the Paterson & Hudson River Railroad Company and the Paterson & Ramapo Railroad Company, the legal title to the railroad property remains in the original companies. If plaintiff in error is obliged to expend the sum of three million dollars and upwards in the improvement of the properties of those companies, the question arises whether such a forced expenditure takes its property for their private benefit. These companies under their respective leases (which have been duly authorized or ratified by the legislature) may be relieved from the obligation of running trains during the term of the lease, but under the order they are also relieved from the burden of altering the crossings or even from making any financial contribution for that purpose; they are not even included as joint obligees, although plaintiff in error requested that if any order were made it be made against these two companies and plaintiff in error jointly, so that the question of the apportionment of the cost of eliminating the crossings might be determined by appropriate proceedings. As the landlords of plaintiff in error and owners of the real estate upon which the improvements required by the order are to be made, they may sit back and receive the full benefit in the vastly increased value of their property without the expenditure of one penny. There are several contingencies upon which the leases might be terminated. Even if under obligation to do so, the lessors would not be financially able to pay for the outlay. But if it be claimed that under the statute the plaintiff in error is required to make this vast expenditure for public use rather than for the private benefit of the two original companies, the statute

Argument for Plaintiff in Error in Nos. 33, 34. 254 U. S.

is objectionable as taking the property of the plaintiff in error without just compensation. Under the charters, the State may take over the property without paying more than its first cost. The facts bring this feature of the case within the principle of decision in Myles Salt Co. v. Iberia Drainage District, 239 U. S. 478.

Again, the statute violates the Fourteenth Amendment because the cost of complying with the order made by virtue thereof will greatly exceed the value of the interest of plaintiff in error in the property, and will make its investment incapable of earning a fair and reasonable return upon such investment. All the expense is charged to the plaintiff in error as the operating company, within the meaning of the statute, and the two underlying companies are not required to pay any part. The duty to operate still rests upon the two underlying companies; the mere fact that they have executed leases to some other company whereby the latter undertakes to perform that duty for them, does not relieve the original companies from their performance of such duty.

There is no valid reason for a distinction between a lessor and a lessee company which would reasonably justify the imposition of the entire cost of changes of grade upon the lessee company, without any contribution whatever from the lessor. See New York & New England R. R. Co. v. Bristol, 151 U. S. 556.

The statute, as construed, violates the contract clause in that it impairs the obligation of the contracts between plaintiff in error and the lessor companies.

The statute, as construed, violates the contract clause, in that it impairs the obligation of the contracts between the State of New Jersey and the lessor companies, to whose rights plaintiff in error has succeeded, by imposing upon plaintiff in error a greater duty, with respect to the construction and maintenance of grade crossings, than was imposed upon them.

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