City of Cincinnati v. Cincinnati Street Ry. Co. (45 Ohio App. 511, 1933)

Hamilton, P. J.

The Cincinnati Street Railway Company brought an action in the court of common pleas against the city of Cincinnati and its officers, seeking to enjoin the collection of a license tax for operating busses under an ordinance of the city of Cincinnati, and in a second cause of action it seeks judgment in the sum of $15,284.34, on account of license fees collected by the city since July 25, 1929, which plaintiff had paid under duress. The claim is that the defendants are without authority to require the plaintiff to pay the license fees provided for in Ordinance No. 246-1927; that the exacting of license fees under the ordinance is illegal in so far as they pertain to plaintiff; that they are illegal by reason of the fact that the state of Ohio was until July 25, 1929, levying an excise tax for the privilege of operating motorbusses, through a levy upon the gross receipts from such operation; and that, for the reason that the license fee is a tax, and the state of Ohio has levied an excise tax, the city is without power to enter that field. The further claim is made that the form of the license fee is a revenue measure in fact.

The defense is that the license ordinance is a regulatory measure, and the plaintiff may he lawfully required to comply therewith; that, if it is considered as a tax, the city has authority to so tax, for the reason that the state has exempted from the excise tax laws busses operating in municipalities, and has therefore not pre-empted that field. The defense admits the collection of the license fees or taxes.

The city cross-petitions for the unpaid license fees accruing prior to April 4, 1928, and for certain sums accruing since June 18, 1928.

The answer of the plaintiff company to the cross-petition is a denial that the sums alleged became due as set forth in the cross-petition.

The case was heard on the second amended petition, the answer thereto, the cross-petition, and the answer to the cross-petition.

The trial court rendered judgment in favor of the plaintiff, the Street Railway Company, perpetually enjoining the city and its officers from collecting the license fees under the ordinance, and granted judgment on the cross-petition for the amount claimed with interest,

From that judgment the defendants prosecute error to this court.

The record discloses that the case was primarily tried on the question whether or not the license was a revenue measure, and, secondly, upon whether the state had pre-empted that field of taxation by levying an excise tax for the privilege of operating motorbusses.

We do not find it necessary to discuss these questions, as in our opinion the decision rests on the proposition that Ordinance No. 246-1927, the Bus License Ordinance, is ineffective in so far as it affects the plaintiff.

In August, 1925, council of the city of Cincinnati passed “Ordinance No. 322-1925, granting to The Cincinnati Street Railway Company a renewal for twenty-five years of the right to maintain and operate' street railroads and street railroad routes and fixing the terms and conditions of such maintenance and operation and repealing and terminating existing grants.”

This franchise grant was accepted in writing, as provided in the ordinance. It therefore became a binding contract between the city and the Cincinnati Street Railway Company for the period named. All terms and conditions of such maintenance and operation are provided in the ordinance.

In October, 1925, council passed Ordinance No. 407-1925, which was designated “An Ordinance supplementing Ordinance No. 322-1925, and authorizing The Cincinnati Street Railway Company, its successors and assigns, to operate motor buses, and motor bus, automotive vehicle and trackless trolley lines, as a part of its street railway system.” This ordinance provided for regulation and control, and is headed: “That Ordinance No. 322-1925, of the City of Cincinnati, be and the same is hereby supplemented, by ordaining the following supplementary sections to read as follows.” Then follows the provision of the grant upon the public ways of the city of Cincinnati as a part of the street railway system, as defined in Ordinance No. 322-1925, as to motor busses and other automotive vehicles and trackless trolley lines. The ordinance provides for certain regulations bringing it under the control of the city, in accordance with the provisions contained in Ordinance No. 322-1925, and provides for the acceptance by the company in writing.

Thus we have the grant to plaintiff — the right to maintain and operate busses to be a part of the twenty-five year franchise granted to the Cincinnati Street Railway Company, the plaintiff in this case. It was accepted by the company, and thereupon became a binding contract between tbe plaintiff company and the city.

Regulation is fully provided for in tbe ordinance itself, so that there is no necessity for a license charge for regulation.

Tbe right to operate and maintain busses- is granted in tbe ordinance.

So long as this remains tbe contract with-the city, tbe city may not add additional burdens without violating tbe contractual rights of tbe Street Railway Company, It requires no citation of authorities on tbe proposition that tbe grant of a franchise such as this creates a contract. Tbe decisions are uniform to this effect; none to tbe contrary.

Tbe ordinance under which it is sought to collect a license fee from tbe Street Railway Company is a general regulatory measure. That ordinance is No. 408-1925; and its title is: “ To provide for tbe regulation of motor transportation companies engaged in tbe business of carrying passengers for hire, requiring a license,” etc.

Since tbe grant to tbe Street Railway Company gives complete authority to operate and maintain its busses, tbe attempt to add any additional money burden, exacted under a penal ordinance, before it could so operate, is clearly violative of tbe company’s contractual rights under its franchise, and tbe persistent threat of prosecution justifies injunctive relief to prevent tbe enforcement of tbe license ordinance against it.

Tbe court being of tbe opinion that tbe plaintiff below was entitled to tbe injunction, it follows that tbe plaintiff was entitled to judgment on tbe second cause of action for tbe amount paid under duress. We find, however, that there is no justification for imposing any interest charges on tbe moneys paid.

Tbe judgment of tbe trial court will therefore be modified by eliminating interest charges, and, as modified, will be affirmed.

Judgment modified and affirmed as modified.

Ross and Gushing, JJ., concur.