James Clark McReynolds

“ The effect of a contract with the city, expressly authorized by amendment to the Rapid Transit Act adopted subsequent to enactment of the Public Service Commission Law, was not involved. The court carefully limited its opinion. And it said: 'The conditions of other franchises may supply elements of distinction which cannot be foreseen. Contracts made after the passage of the statute (Consol. Laws, c. 48 (Public Service Commission Law) ) may conceivably be so related to earlier contracts either by words of reference or otherwise as to be subject to the same restrictions. ”

“ The expanse of the greater city, together with its peculiar physical characteristics, render exceedingly difficult any effort to provide rapid and cheap transportation for its residents and the crowds of outsiders who travel therein daily for business or pleasure. ”

“ The Interborough Company shall deduct and retain each year sums sufficient to pay rentals on old lines required by contracts 1 and 2, say $3,000,000; taxes; operating expenses; maintenance; depreciation; $6,335,000, the estimated average profit derived during the years 1911-1912 from operation of the old lines under contracts 1 and 2; 6 per cent. on $80,000,000 advanced for construction and paid for original equipment under contract No. 3; interest on other cost of equipment. These are cumulative. Thereafter the city shall receive 8.76 per cent. ”

“ Prior to 1903, under franchises dating from 1875, the Manhattan Railway, or its predecessors, constructed, owned, and operated the four original elevated railway lines extending northward from South Ferry along Second, Third, Sixth and Ninth avenues. All these were leased by the Interborough Company in 1903 and now constitute the oldest part of its system. Long before and ever since 1913 they have charged five cents per passenger and from this the lessee for many years derived substantial net profits. ”

“ The population of the city in 1910 was 4,785,000 (in 1927, 5,970,000) , of whom 2,330,000 resided within Manhattan, in the southern portion of which are located the great business centers of the metropolitan district. The Bronx, on the mainland north of Harlem River, and Queens and Brooklyn on Long Island, have undergone very rapid development and increased greatly in population since 1900. ”

“ All charges made or demanded by any such corporation, person or common carrier for the transportation of passengers, freight or property or for any service rendered or to be rendered in connection therewith, as defined in section two of this act, shall be just and reasonable and not more than allowed by law or by order of the commission having jurisdiction and made as authorized by this Act. ”

“ Concerning extension certificates section 24 of the amended act declares: '4. The certificate or certificates prepared by the commission as aforesaid when delivered and accepted by such person, firm or corporation shall be deemed to constitute a contract between the said city and said person, firm or corporation according to the terms of the said certificate; and such contract shall be enforceable by the commission acting in the name of and in behalf of the said city or by the said person, firm or corporation according to the terms thereof, but subject to the provisions of this act. ”

“ For the year ended June 30, 1926, the Interborough realized from the subway operation a net surplus of $6,569,573.03 after the payment of all operating expenses, taxes, interest, and other fixed charges, including the rentals of $2,655,186.26 to the city under contracts Nos. 1 and 2. The surplus is the amount available for the payment of dividends upon the capital stock of the company so far as subway operation by itself is concerned. The amount of total capital stock outstanding is $35,000,000. * * * The subway earnings alone, therefore, under contract No. ”

“ The longest possible continuous trip by a passenger was 17.4 miles. For equipping them the lessee claims a capital investment of $60,000,000; but large items are questioned and the true sum may be less than $40,000,000. This equipment, with real estate valued at $300,000 and office sundries, is all the property connected with the subways which the Interborough now owns. The lines were opened for traffic October 27, 1904, and prior to 1919 their operation yielded annually large net profits.
The court below thought that, unless modified by contract No. ”