Boise City v. Idaho Power Co.

• Citation: 37 Idaho 798,220 P. 483
• Parties: BOISE CITY, Appellant, v. IDAHO POWER COMPANY and PUBLIC UTILITIES COMMISSION OF THE STATE OF IDAHO, Respondents
• Decision Date: 05 October 1923
• Court: United States State Supreme Court of Idaho

220 P. 483

37 Idaho 798

BOISE CITY, Appellant, v. IDAHO POWER COMPANY and PUBLIC UTILITIES COMMISSION OF THE STATE OF IDAHO, Respondents

Supreme Court of Idaho

October 5, 1923

PUBLIC UTILITIES - MUNICIPAL CORPORATION - CONTRACTS BETWEEN - POWER OF COMMISSION-DUPLICATE EQUIPMENT-MAINTENANCE OF.

1. The right of a municipal corporation, reserved in a franchise granted a public utility, to purchase the system erected under authority of the franchise, has no reasonable relation to fixing or determining rates to be charged by such public utility.

2. When a public utility, as the result of the purchase by it of a competing utility, found that it had duplicate equipment by reason of the consolidation of the two systems, and, in order to be able to remove or dispose of such duplicate equipment entered into a contract with the municipality in which the municipality, for a stated consideration, surrendered all its rights reserved in a franchise under which one of the systems was constructed, among which was a right to purchase the system constructed under such franchise, thereby enabling the utility to remove such duplicate equipment, the utility is the beneficiary of the contract; and an order of the utilities commission directing that the consideration to be paid, under the contract, to the municipality, be collected by the utility from its users in the municipality, is beyond the power of the commission and is void.

APPEAL from orders of the Public Utilities Commission. Orders set aside.

Orders, reversed and set aside. Appellant recovered its costs.

J. M Lampert, E. P. Barnes, Henry Z. Johnson and C. S. Hunter, City Attorney, for Appellant.

A franchise granted by a municipality to a public utility, pursuant to authority conferred by law, after it has been accepted by the public utility, is binding on the municipality and the state as well, and constitutes a contract protected by the United States constitution against the state legislature impairing it, the consideration therefor being the public utility undertaking to perform a public service for a fixed period. (Central Union Telephone Co. v. Indianapolis Telephone Co., 189 Ind. 210, 126 N.E. 628; Greensburg Water Co. v. Lewis, 188 Ind. 439, 128 N.E. 103.)

Where contract terms between a state or municipality and a corporation or individual are the proper subject matters of a contract between such parties, and plainly express the duties of the parties, and the contract is legally entered into, it is within the protection of the contract clause (Const. U.S. art. 1, sec. 10), and cannot be impaired by the state or municipality. (Chicago, R. I. & P. Ry. Co. v. Taylor, 79 Okla. 142, 192 P. 349.)

Franchise contracts are under the protection of the provisions of the federal constitution relating to the impairment of contracts and due process of law. (Columbus R. Power & Light Co. v. Columbus, 249 U.S. 399, 39 S.Ct. 349, 63 L.Ed. 669; Knoxville Gas Co. v. Knoxville, 253 F. 217; Cleveland v. Cleveland City R. Co., 194 U.S. 517, 24 S.Ct. 756, 48 L.Ed. 1102; Detroit v. Detroit Citizens' Street R. Co., 184 U.S. 368, 22 S.Ct. 410, 46 L.Ed. 592; Knoxville Water Co. v. Knoxville, 189 U.S. 437, 23 S.Ct. 531, 47 L.Ed. 891; City R. Co. v. Citizens' Street R. Co., 166 U.S. 557, 17 S.Ct. 653, 41 L.Ed. 1114.)

The power company, successor in interest of the Beaver River Company, cannot be released or relieved from any liability under such franchise. (Const., art. 11, sec. 15; Cooper v. Utah L. & Ry. Co., 35 Utah 170, 102 P. 202.)

The orders appealed from are null and void, for the reason that the utilities commission had not been empowered by the act creating it to abrogate or nullify conditions attached to or contained in franchise agreements between municipalities and public service corporations already entered into at the time of the adoption of the act. (Quinby v. Public Service Com., 223 N.Y. 244, 119 N.E. 433, 3 A. L. R. 685; City of Niagara Falls v. Public Service Com., 229 N.Y. 333, 128 N.E. 247; City of Lima v. Public Utilities Com., 100 Ohio 416, 126 N.E. 318.) The commission has such jurisdiction and authority only as is expressly or by necessary implication conferred upon it by the legislature and no other.

The shifting of the payments in lieu of the franchise tax (which was to be canceled by the city), as a consideration for the duplicate equipment, on to the consumers in Boise City, of which Boise City was one, to be prorated among them, thereby creating and imposing a surcharge upon them, is a subterfuge, as dishonest as it is unprecedented. (Oklahoma City v. Corporation Com., 80 Okla. 194, 195 P. 498, and cases cited.)

Clarence T. Ward and Hawley & Hawley, for Respondent Idaho Power Co.

The commission approved the contracts, but noting that Boise City required the power company to pay an annual tax or payment, instructed the power company to collect that payment from the city patrons rather than from the general system patrons. This was a regular exercise of right and duty of the commission to prevent discrimination, unfair and unreasonable rates, treatment and practices. (C. S., secs. 2425, 2427, 2450-2452; Idaho L. & P. Co. v. Blomquist, 26 Idaho 222, Ann. Cas. 1916E, 282, 141 P. 1083; Murray v. Public Utilities Com., 27 Idaho 603, 150 P. 47; San Diego Land & Town Co. v. National City, 174 U.S. 739, 19 S.Ct. 804, 43 L.Ed. 1154; Consolidated Gas Co. v. Newton, 267 F. 231; Contra Costa Water Co. v. City of Oakland, 165 F. 518; Havre de Grace & P. B. Co. v. Towers, 132 Md. 16, 103 A. 319; Sandpoint L. & P. Co. v. City of Sandpoint, 31 Idaho 498, 173 P. 192, L. R. A. 1918F, 1106; Union Dry Goods Co. v. Georgia Public Service Corp., 248 U.S. 372, 39 S.Ct. 117, 63 L.Ed. 309; Minneapolis, St. P. & St. S. M. Ry. v. Menasha Woodenware Co., 159 Wis. 130, 150 N.W. 411, L. R. A. 1915F, 732; Atlanta & W. P. R. Co. v. Camp, 130 Ga. 1, 14 Ann. Cas. 439, 60 S.E. 177; Durant v. Consumers' Light & P. Co. (Okl.), 177 P. 361; Leiper v. Baltimore & P. R. R. Co., 262 Pa. 328, 105 A. 551; Schrader v. Steubenville, 84 W.Va. 1, 99 S.E. 207; Calhoun v. Capital Trust Co., 249 U.S. 596, 39 S.Ct. 289, 64 L.Ed. 794; Fulteron v. Board of Public Utility Com. , 254 U.S. 394, 41 S.Ct. 169, 65 L.Ed. 322; Public Utilities Com. of Kansas v. Wichita, 238 F. 37; Raymond Lumber Co. v. Raymond L. & P. Co., 92 Wash. 330, 159 P. 132, L. R. A. 1917C, 574; Atlantic Coast etc. Co. v. City of Goldsboro, 232 U.S. 547, 34 S.Ct. 364, 58 L.Ed. 721; State v. Public Service Com., 275 Mo. 201, 204 S.W. 497; Pawhuska Co. v. Pawhuska etc. Co., 64 Okla. 214, 166 P. 1058; State ex rel. Webster v. Superior Court, 67 Wash. 37, Ann. Cas. 1913D, 78, 120 P. 861, L. R. A. 1915C, 287; Salt Lake City v. Utah P. & L. Co., 52 Utah 210, 173 P. 556, 3 A. L. R. 726, and annotations; Kansas City Bolt & Nut Co. v. Light Co., 275 Mo. 529, 204 S.W. 1074, affirmed by U. S. Sup. Ct., 252 U.S. 571, 40 S.Ct. 392, 64 L.Ed. 721; Randall Gas Co. v. Star Glass Co., 78 W.Va. 252, 88 S.E. 841; Atlanta etc. Co. v. Camp, 130 Ga. 1, 124 Am. St. 151, 14 Ann. Cas. 439, 60 S.E. 177, 9 A. L. R. 420, annotations, beginning p. 423; Home Tel. & Tel. Co. v. Los Angeles, 211 U.S. 265, 29 S.Ct. 50, 53 L.Ed. 176; Yuma Gas, L. & W. Co. v. City of Yuma, 20 Ariz. 153, 178 P. 26.)

The commission, as the agent of the legislature, is charged with the duty of examining and changing, not only the rates in utility service contracts, but also the conditions of services and facilities where under any contract they may be the source of preference or discrimination. (Manigault v. Springs, 199 U.S. 473, 26 S.Ct. 127, 50 L.Ed. 274.)

The same power exists over contracts or franchises between utilities and municipalities. (American Brake Shoe etc. Co. v. Pittsburg Ry. Co., 270 F. 812.)

It makes no difference that the contract antedated the creation of the commission. The rule is equally effective. (McCook etc. Co. v. Burtless, 98 Neb. 141, 152 N.W. 334, L. R. A. 1915D, 1205; Sandpoint Water & Light Co. v. Sandpoint, supra.)

A. H. Conner, Attorney General, for Respondent Public Utilities Commission.

WM. E. LEE, J. Budge, C. J., and Dunn and William A. Lee, JJ., concur, McCARTHY, J., Concurring Specially.

OPINION

WM. E. LEE, J.

--In 1912, which was prior to the enactment of the law creating the Public Utilities Commission, the Beaver River Power Company was granted a franchise by the city of Boise to construct an electrical distribution system in the city for the purpose of supplying electrical energy to the city and its citizens, and, under the franchise, the Beaver River Power Company constructed its system at considerable expense. In consideration of the granting of this franchise by the city of Boise, the Beaver River Power Company agreed to pay the city of Boise, each year during the period of the franchise, a percentage of the gross receipts of the company from its business in Boise, and the city of Boise was given the right, at the expiration of the term of the franchise, to purchase the property installed thereunder. The term of the franchise was twenty years. The Idaho Power Company, one of the respondents herein, subsequently acquired the property of the Beaver River Power Company, including the franchise. Boise City also granted a franchise to another of the predecessors of the Idaho Power Company to construct a system for the distribution and sale of electrical energy in Boise and, under that franchise, such a system was constructed. Prior to the commencement of these proceedings, therefore, the Idaho Power Company had and owned two franchises and two distribution systems in Boise. As a result of the ownership and operation of both systems by one concern, it was found that there was considerable duplicate equipment in the city. This duplicate equipment...