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Milwaukee Elec. Ry. & Light Co. v. Railroad Comm'n, 238 U.S. 174 (1915)

Milwaukee Electric Railway & Light

Company v. Railroad Commission

No. 233

Argued April 20, 21, 1915

Decided June 14, 1915

238 U.S. 174


Where the fixing of rates does not impair the obligation of contracts, the exercise by a municipality of a lawful power to fix rates does not deprive the public utility company of its property without due process of law where it does not appear that the rates fixed are confiscatory.

The fixing of rates, which may be charged by public service corporations -- in this case, a street car corporation -- is a legislative function of the state.

While the state may enter into contracts preventing it for given periods from exercising the function of ratemaking, such a renunciation must be so clear and unequivocal as to permit no doubt of its construction. Home Telephone Co. v. Los Angeles, 211 U. S. 265.

While it is the duty of this Court to determine for itself whether there was a contract and the extent of a binding obligation, and the parties are not concluded by the decision of the state court, in so determining, this Court gives much consideration to the decisions of the state court construing the statutes of the state under which the contract is alleged to have been created.

In this case, as this Court cannot say that the state statute involved in this action unequivocally grants to municipalities the power to deprive the legislature of the right to exercise the ratemaking function in the future, and as the state court in other cases has held that the statute did not indicate an intention to surrender such right, this Court affirms the judgment of the state court holding that no irrevocable contract was created by an ordinance establishing rates of fare of a street car company, notwithstanding that a majority of the members of the highest court of the state did not concur in that view in this case.

153 Wis. 502 affirmed.

The facts, which involve the constitutionality under the impairment of obligation clause of the federal Constitution

Page 238 U. S. 175

and the due process clause of the Fourteenth Amendment of an order of the Wisconsin State Railroad Commission establishing fares upon the system of the plaintiff in error, are stated in the opinion.

Page 238 U. S. 176

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