San Francisco Gas & Elec. Co. v. City and County of San Francisco

• Decision Date: 07 August 1911
• Docket Number: 14,742.
• Citation: 189 F. 943
• Court: U.S. District Court — Northern District of California
• Parties: SAN FRANCISCO GAS & ELECTRIC CO. v. CITY AND COUNTY OF SAN FRANCISCO et al.

189 F. 943

SAN FRANCISCO GAS & ELECTRIC CO. v. CITY AND COUNTY OF SAN FRANCISCO et al.

No. 14,742.

United States Circuit Court, N.D. California.

August 7, 1911

Percy V. Long, City Atty., and Thomas E. Haven, Asst. City Atty. for the motion.

Garret W. McEnerney, opposed.

VAN FLEET, District Judge.

A motion was heretofore made by the respondents to dismiss this case (with certain others of like character) for want of jurisdiction, in that the facts stated in the bill do not really and substantially involve a controversy properly cognizable in this court under the judiciary act. The motion was denied at the hearing, the court being of opinion that it was not well founded, for the reasons then briefly stated orally.

Since the ruling the attention of the court has been called to the fact that the question presented has excited more than local interest; and, the views of the court not being available as an authoritative reference, it is deemed proper to accede to the suggestion that the reasons actuating it be expressed in writing.

There is but one substantive question involved, and the basis upon which it rests may be briefly stated:

The bill seeks to enjoin the enforcement of an ordinance of the board of supervisors of the city and county of San Francisco fixing the annual gas and lighting rates in the municipality, upon the ground, first, that the rates provided by the ordinance are inadequate to afford a due return to complainant, a public service corporation furnishing light to the city, and will operate to deprive it of its property without due process of law, in violation of the fourteenth amendment to the Constitution of the United States; and secondly, upon the further ground that the ordinance is in form in violation of the express provisions of the charter of the city under which it was adopted, in that it embraces more that one subject, and is for that reason void and of no effect.

The fourteenth amendment to the Constitution of the United States provides that no state shall 'deprive any person of life liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws'; and the settled construction of this provision is that it contemplates action by the state, through some one of its departments, functionaries, or agencies, having the effect prohibited, and not the act of a private individual or other agency acting without state authority. The Constitution of the state, by section 19, art. 11, vests in municipalities the power to establish, maintain, and regulate gas and lighting rates therein under the conditions alleged in the bill, and it was by virtue of this provision that the ordinance involved was passed; and it is conceded that a municipality, exercising the authority granted by that provision, is acting as an agency of the state, and that a valid ordinance adopted under such grant would constitute state action within the contemplation of the fourteenth amendment to the Constitution of the United States. But the Constitution of the state, in section 13, art. 1, also provides in almost the precise terms of the fourteenth amendment that 'no person shall be deprived of life liberty or property without due process of law'; and this latter provision is the underlying foundation which gives rise to the proposition involved in the motion.

Not questioning the jurisdiction in this court of a case arising under the Constitution or laws of the United States, the contention is that the bill does not disclose such a case, for the reason that the facts do not show 'state action.' This is predicated upon the argument that, conceding that the state has vested in a tribunal or functionary full and plenary power, as here, to do a certain thing, an act done under such authority is not the act of the state in the sense here involved, unless it be so done as to be legally unassailable; that is, so done that, if passed in review by the highest judicial tribunal of the state, it would necessarily be held valid in form and substance; that anything less than this is not state action. In other words, to apply the principle to the concrete case presented by the bill, that the above provision of the Constitution of the state vesting in municipalities the power to fix gas rates must be read in conjunction with the provision of the same instrument that no person shall be deprived of his property without due process of law; and if an ordinance adopted under the supposed authority of the first is found to be obnoxious to the second by fixing rates so unreasonably low as to be confiscatory of the property of those affected, or is invalid for any other reason under the Constitution or laws of the state, then the adoption of such ordinance cannot be said to have been had under the authority of the state in a sense to bring it within the prohibition of the fourteenth amendment; that as the present bill by its averments, when read in the light of these provisions, discloses upon its face that the ordinance in question would not stand this test, it pleads the complainant out of court by showing that the controversy is not one arising under the Constitution of the United States, but involves alone the Constitution and laws of the state, jurisdiction of which rests solely in the courts of the state.

This contention, while not new, is nevertheless somewhat startling in view of the history of this character of litigation in the federal courts, wherefrom it has been very generally assumed that the question had been definitely set at rest. It is based entirely upon the supposed authority of the recent decision of the Circuit Court of Appeals for this circuit in the case of Seattle Electric Co. v. Seattle R. & S. Ry. Co. (C.C.A.) 185 F. 365, and the cases referred to therein. It is not contended that the facts of that case in any way required a decision going to the extent claimed by respondents, and, in fact, as will be seen, no such question was involved; but it is claimed that the language of the court lays down a principle broad enough to support the contention here made, and in this respect respondents are not without support. That there is some general language in that opinion which, when separated from its context and dissociated from its facts, lends color to the construction put upon it by respondents, cannot be denied, language which has induced a similar view, not only by able counsel seeking, through a petition for rehearing, its modification, but by leading law journals. 23 Green Bag, p. 153; 4 Lawyer and Banker, p. 132.

With the utmost disposition to observe any authoritative declaration of the Circuit Court of Appeals, the ruling denying the motion was made upon the assumption, as stated, that the question presented had been so firmly settled against respondents' contention by numerous decisions of the federal courts, including cases decided by the Supreme Court, prior to the ruling in the Seattle case, that the latter could not reasonably have ascribed to it the purpose and effect attributed to it by respondents; and a further examination of the question for the purposes of this opinion has tended only to confirm that view. Very certainly the idea should not be readily indulged that the Circuit Court of Appeals in that case intended to 'take a new departure,' as suggested by respondents, if that 'departure' is found to be directly at variance with principles previously announced by the Supreme Court; and yet, if respondents' construction of that decision is correct, I think it can be confidently said that such is precisely the situation that confronts us. As a means, therefore, of throwing light upon whether the Court of Appeals intended any such result as that sought to be ascribed to it, it will be well before a more particular discussion of their opinion to ascertain just what the state of the law was on the question presented at the time that decision was rendered. For this purpose, it is not deemed necessary to refer to the large number of cases of a similar character in which jurisdiction has been asserted and exercised by the federal courts without challenge; but it will be sufficient to call attention to some of those arising either under the same provision of the Constitution or the cognate one prohibiting the states from passing any act impairing the obligation of contract, wherein the same objection has been interposed and directly adjudicated.

The case of Raymond v. Chicago Union Traction Co., 207 U.S. 20, 28 Sup.Ct. 7, 52 L.Ed. 78, is strictly analogous to the present. There the Constitution of Illinois created a state board of equalization, requiring it in terms to carry out the provisions of the state Constitution, 'so that every person shall pay a tax in proportion to the value of his, her or its property. ' Certain railroad companies brought proceedings in the United States Circuit Court to enjoin the collection of taxes claimed to have been improperly equalized by this board, and based upon an assessment alleged to violate the plaintiffs' rights under the fourteenth amendment. The record shows (52 L.Ed. p. 82 et seq.) that the point was there made in the briefs that no federal question was presented, since the action of the state board was contrary to the Constitution and laws of the state, and it would be presumed that the state courts would give full relief; and a dismissal was sought upon that ground. The court, through Mr. Justice Peckham, upheld the jurisdiction of the court and affirmed the judgment, holding that the action of the board of equalization, being within its grant of power, was, although illegal, the action of the state. It is there said:

'The most important function of the board, that of equalizing assessments, in

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