146 F. 150 (S.D.N.Y. 1906), Consolidated Gas Co. v. Mayer

Citation:146 F. 150
Case Date:June 08, 1906
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 150

146 F. 150 (S.D.N.Y. 1906)



MAYER et al.

United States Circuit Court, S.D. New York.

June 8, 1906

James F. Beck, Charles F. Mathewson, John A. Garver, and John F. Leillon, for the motion.

Charles E. Hughes, and William P. Burr, opposed.

LACOMBE, Circuit Judge.

The parties to this suit are all citizens of the state of New York, but the main contention-- practically, the sole contention-- of the complainant is that certain statutes of this state and an order of the gas commission are obnoxious to various provisions of the Constitution of the United States, and for that reason void. This court, therefore, from which appeal lies direct, without review by any intermediate tribunal, to the Supreme Court of the United States, not only has jurisdiction, but is the appropriate forum, because through a suit brought here a final decision by the ultimate interpreter of that Constitution can be most quickly obtained.

This is a motion by the complainant for a continuance of the temporary injunction, which was issued as the condition of an adjournment asked for by defendants, and also for an enlargement of the terms of such injunction. It is in no sense a hearing upon the merits of all the issues presented. The fundamental propositions in dispute involve many controverted questions of fact, and it is the practice of this court not to resolve such questions upon affidavits, but to reserve them for final hearing, where every sworn statement comes to the court, not

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ex parte but after the test of a cross-examination. The matters to be passed upon here and now can be most tersely and quickly presented by an analysis of the injunction order already made.

1. In entering that order the court did not find, nor did it express nor even intimate an opinion, that the action of the gas commission in fixing the price to be charged for gas at 80 cents per 1,000 cubic feet was confiscatory, nor that the act of the Legislature establishing the same price (chapter 125 of 1906) was in that respect unconstitutional and void. It did not undertake to abrogate or nullify that provision of the statute. As between the consumer and the manufacturer, it left the question as to what the former should pay to the latter precisely where it stood before. Any consumer who might be asked to pay the old rate was left by the order entirely free to decline to pay it, and to make a tender at the new rate for the gas he had consumed. Naturally so, because, except for the city of New York, whose situation is exceptional, the individual consumer was not a party to the suit, and had not been served with process. In the case of a consumer, who upon demand chose to pay the old rate, the order provided that the company should not cover the 20 cents difference into its treasury, but should leave it impounded under direction of the court, so as fully to insure its return to the person paying the same in the event of the company's failing to succeed in its litigation. In the case of a consumer who chose to make tender at the new rate, and to stand upon whatever rights were secured to him by the action of the gas commission in fixing that rate, and by the action of the Legislature in establishing the same rate, the order left him entirely free and untrammeled to apply for such relief as the law afforded him in the event of the company's seeking to compel payment of the difference. It was not perceived when the order was made, nor is it perceived now, upon what theory this court could by an injunction restrain any individual who was not a defendant, and had never been served with process, from himself applying to an appropriate court if he should conceive himself to be aggrieved. What relief he might obtain when he so applied would be for that court to determine when it heard his application. The order did, however, provide that the gas company might charge or demand payment at the old rate, and might collect at that rate from such as chose to pay, and it enjoined the defendants (who are public officers, and, as such, the proper persons to institute and prosecute actions, to enforce and recover certain statutory penalties) from in any way enforcing, or attempting to enforce, two acts of the Legislature and an order of the gas commission, or any of the provisions thereof, against the complainant, until it should have its day in court, upon such a case as it might be able to make, to question the constitutionality of that order and of those acts. The reason why it was thought that a court of equity, irrespective of any question of the merits of the controversy as to the propriety of the new rate, should upon mere inspection of the statutes themselves grant such temporary relief will be apparent upon the state of a few elementary propositions of law, and an analysis of certain provisions of those statutes.

A corporation which undertakes, for its own emolument, to supply gas to the inhabitants of a municipality, under charters and franchises

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from the state which allow it to embark in such industry, and invite its stockholders to invest their money therein, in engaged in what is called a 'public service' or a 'public utility,' and therefore is under the supervision, inquisition, and regulation of the state as to the manner in which it conducts its business. If, untrammeled by competition, it charges a price far above all reasonable cost to the helpless consumer, who must pay that price or go without, while it receives an exorbitant return on such of its property as is invested in the enterprise, the state may step in and reduce that price to such sum as will, taking everything into consideration, be a reasonable return upon what has been adventured in the enterprise on the faith of the state's franchises. No one disputes this proposition. But in fixing such price the state should itself be fair and reasonable-- should certainly stop short of confiscation. If it were established by uncontroverted proof that, in materials, labor, and wear and tear of plant at the lowest conceivable valuation, the actual cost of producing gas of a proper standard in the holders was 50 cents per 1,000 cubic feet, it would be confiscation for the state to require the manufacturer to deliver such gas to all consumers at 5 cents per 1,000 cubic feet. Such an action of the Legislature would be obnoxious to the Constitution of the state, to the Constitution of the United States, and to common right and justice. There may be person who dispute this proposition, but it may safely be assumed that it is accepted by every community which lives under law and not under anarchy. These are the two extremes, and somewhere between them there lies a dividing line. Who is to determine where that dividing line lies? Under our system of government that question has always been left to the decision of the courts. Reagan v. Farmers' L. & T. Co., 154 U.S. 362, 14 Sup.Ct. 1047, 38 L.Ed. 1014; Smyth v. Ames, 169 U.S. 466, 18 Sup.Ct. 418, 42 L.Ed. 819. Every individual who feels himself aggrieved either by the action of some...

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