Attleboro Steam & Electric Co. v. Narragansett Electric Lighting Co.

• Decision Date: 12 February 1924
• Docket Number: 173.
• Citation: 295 F. 895
• Court: U.S. District Court — District of Rhode Island
• Parties: ATTLEBORO STEAM & ELECTRIC CO. v. NARRAGANSETT ELECTRIC LIGHTING CO.

295 F. 895

ATTLEBORO STEAM & ELECTRIC CO. v. NARRAGANSETT ELECTRIC LIGHTING CO.

No. 173.

United States District Court, D. Rhode Island.

February 12, 1924

Robert G. Dodge and Harold S. Davis, both of Boston, Mass., and Archibald C. Matteson, of Providence, R.I., for plaintiff.

A. R Graustein and Ropes, Gray, Boyden & Perkins, all of Boston Mass., and Arthur M. Allen and Hinckley, Allen, Tillinghast &amp Phillips, all of Providence, R.I., for defendant.

BROWN District Judge.

This is a bill in equity, brought by the Attleboro Steam & Electric Company, a Massachusetts corporation, against the Narragansett Electric Lighting Company, a Rhode Island corporation, to enjoin the defendant from cutting off the plaintiff's supply of electrical energy so long as the plaintiff conforms to the terms of a written contract dated May 8, 1917, whereby the defendant undertook to sell and deliver to the plaintiff during a term of 20 years all the electrical energy to be supplied by the Attleboro Company to its customers in Attleboro, Mass.

The bill alleges tat the plaintiff has no generating plant and is unable to obtain from any source, other than the defendant any substantial supply of electrical energy, and that if the defendant's threat to cut off plaintiff's supply of electrical energy should be carried out, the city of Attleboro would be deprived of electrical energy and power to the incalculable damage of the plaintiff and of the citizens of Attleboro.

The principal dispute between the parties arises from the demand by the Narragansett Company for an increased charge for electrical energy.

The plaintiff insists that the rate fixed by the contract of May 8, 1917, and approved by the Public Utilities Commission of the state of Rhode Island, is still in force. This rate is shown in schedule described as R.I.P.U.C. No. 68 (Exhibit 2 in the present case).

The defendant contends that this contract rate has been superseded by a new schedule of rates, applicable to this contract alone, filed on April 6, 1921, with the Public Utilities Commission, and by its order of April 27, 1921, put in effect as R.I.P.U.C. No. 101 (Exhibit 4 in the present case).

As the Rhode Island Public Utilities Act (Public Laws 1912, c. 795) was in force before the making of the contract of May 8, 1917, and as the Narragansett Electric Lighting Company was within the term 'public utility' as defined by that act, the Attleboro Company had full notice that it was dealing with a Rhode Island corporation of limited power to contract, and subject to continuous regulation in the public interest through an administrative legislative agent, the Public Utilities Commission.

The plaintiff contends that the contract of May, 1917, relates to interstate commerce, and that the Rhode Island statute affecting public utilities was intended to regulate only the rights of residents of Rhode Island with respect to service rendered in that state.

As it is apparent that losses upon contracts for the delivery of electrical energy for use outside the state might affect the financial ability of the Narragansett Company to render service in Rhode Island at reasonable rates, and that there might thus result a discrimination in rates which would be unfavorable to residents of Rhode Island and favorable to the residents of Massachusetts engaged in the same lines of industry, we should be reluctant to accept the contention that, though the corporate capacity of the Narragansett Company to contract with citizens of Rhode Island is plainly limited and subject to legislative control through the Public Utilities Commission, yet in making contracts with corporations or citizens of contiguous or remote states for the supply of electricity generated in Rhode Island it is free from such control.

One who deals with a corporation, whether he be a citizen of the same or another state, is chargeable with knowledge of its corporate power, and of any statutory limitation upon, or reservation of legislative control over, its exercise of corporate powers granted by the state of its creation.

Without further discussion of the question whether or not the contract relates to interstate commerce, and whether the acts of the Public Utilities Commission relevant to the present case are invalid as an attempt to fix rates for interstate commerce, we may assume for the purposes of this case that we have to deal with a contract made by the defendant with a Rhode Island corporation, whose contractual powers were limited and subject to continuous regulation by the Public Utilities Commission of Rhode Island, at least in the absence of any attempt by Congress to act under its power to regulate interstate commerce. See Pennsylvania Gas Co. v. Public Utilities Commission, 252 U.S. 23, 29, 31, 40 Sup.Ct. 279, 64 L.Ed. 434.

The principal question in this case is what effect upon a special rate formerly established by contract between the parties and approved by the Public Utilities Commission of Rhode Island is to result from the following proceedings before the Public Utilities Commission:

Narragansett Electric Lighting Company,

Executive Offices, Turks Head Building, Providence, R.I.

Public Utilities Commission, State of Rhode Island-- Gentlemen: We are filing herewith R.I.P.U.C. No. 101, canceling R.I.P.U.C. No. 68, for the purpose of increasing the rate paid by the Attleboro Steam & Electric Company for electricity.

We respectfully request that you waive the statutory notice and allow this rate to become effective on all electricity billed on and after April 1, 1921.

Very truly yours,

(Signed) E. A. Barrows, President.

Stamped: Received April 6, 1921.

Public Utilities Commission, State of Rhode Island.

Stamped: In Regular Session, Public Utilities Commission, April 27, 1921.

Consent granted. Order No. 584.

G. A. Carmichael, Secy.

A true copy. Attest:

(Signed) George A. Carmichael, Secretary.

R.I.P.U.C. No. 101, Canceling R.I.P.U.C. No. 68.

Narragansett Electric Lighting Company.

Special Rate to Attleboro Steam & Electric Company.

Character of Service. Electricity to be delivered to the Attleboro Company at the East Providence substation of the Narragansett Company, or at such other point or points as may be mutually agreed upon by the parties, at 22,000 or other agreed voltage. Said electricity to be in the form of three-phase sixty-cycles alternating current.

Conditions. The Attleboro Company to receive electricity at said East Providence substation and to bear all expense of transmitting the electricity thus received.

Rate. (a) A service charge of such amount as will equal the cost to the Narragansett Company of taxes, insurance, depreciation, obsolescence, and any other fixed charges and net the Narragansett Company an 8 per cent. dividend upon that portion of the cost of the plant which can properly be allocated to the generation of electricity for and the delivery of such electricity to the Attleboro Company.

(b) A charge per kilowatt hour for all electricity delivered which shall be equal to the cost per kilowatt hour to the Narragansett Company of generating and delivering such electricity to the Attleboro Company at said point of delivery plus a fixed addition thereto of one mill per kilowatt hour.

(c) A charge equal to any and all taxes paid by the Narragansett Company on account of or having relation to the electricity generated for or sold or delivered to the Attleboro Company or any payments receivable or received by the Narragansett Company therefor, including the payment received as a service charge or otherwise incidental to or arising out of the service rendered or to be rendered by the Narragansett Company to the Attleboro Company.

Discounts. The above rate is net.

Term of Contract. April 1, 1921, to April 1, 1938.

Effective on all electricity billed on and after April 1, 1921.

A true copy. Attest:

(Signed) George A. Carmichael, Secretary.

Stamped: Received April 6, 1921.

Public Utilities Commission, State of Rhode Island.

Public Utilities Commission of Rhode Island.

Petition of Narragansett Electric Lighting Company filed with accompanying schedules on the 6th day of April, A.D. 1921, requesting waiver of statutory 30 days' notice upon a certain rate schedule R.I.P.U.C. No. 101, canceling R.I.P.U.C. no. 68, for the purpose of increasing the rate paid by the Attleboro Steam & Electric Company for electricity considered on the 6th day of April, A.D. 1921, at an informal hearing at which representatives of both companies were in attendance and heard.

It appearing that a continuance of the operation of the terms of the rate contract between said companies would result in a loss to the petitioning company, and would therefore discriminate against its other consumers, and action upon said petition having been deferred by the Commission in order that said companies might continue negotiations for the purpose of arriving at a mutually satisfactory and equitable modification of said rate contract;

It now appearing that such negotiations have been without result:

Upon consideration, it is--

Ordered that, for good cause shown, said Narragansett Electric Lighting Company be and it hereby is authorized to put into effect without the statutory publication and notice to the Commission, tariff R.I.P.U.C. No. 101, canceling R.I.P.U.C. No. 68, for the purpose of increasing the rate paid by the Attleboro Steam & Electric Company for electricity.

April 27, 1921.

No. 584.

A true copy. Attest:

(Signed) George A. Carmichael, Secretary.

The defendant, Narragansett Electric Lighting Company, contends that it has followed the procedure prescribed in the last paragraph of section 48 of the Public Utilities Act of 1912 (Public Laws...