City of Duluth v. Railroad and Warehouse Commission

• Decision Date: 14 May 1926
• Docket Number: No. 25340.,25340.
• Citation: 167 Minn. 311,209 N.W. 10
• Parties: CITY OF DULUTH v. RAILROAD AND WAREHOUSE COMMISSION OF STATE OF MINNESOTA et al.
• Court: Minnesota Supreme Court

209 N.W. 10

167 Minn. 311

CITY OF DULUTH v. RAILROAD AND WAREHOUSE COMMISSION OF STATE OF MINNESOTA et al.

No. 25340.

Supreme Court of Minnesota.

May 14, 1926.

Appeal from District Court, St. Louis County; C. R. Magney, H. J. Grannis, and E. J. Kenny, Judges.

Suit by the City of Duluth against the Railroad and Warehouse Commission of the State of Minnesota and another for an injunction. Judgment dismissing the suit, and plaintiff appeals. Affirmed.

John B. Richards, of Duluth, for appellant.

C. L. Hilton, Atty. Gen., Ernest C. Carman, Asst. Atty. Gen., and Washburn, Bailey & Mitchell, of Duluth, for respondents.

HOLT, J.

This action was brought by the city of Duluth to enjoin the Railroad and Warehouse Commission from hearing and considering the petition of the Duluth Street Railway Company to value the increase in its property subsequent to the time of the previous valuation upon which the commission made its order fixing the rate of fare. The street railway company was also made a defendant. From the judgment of dismissal the city appeals.

The appeal, as well as the action, is based solely on the proposition that section 10 of chapter 278, Laws of 1921, known as the Brooks-Coleman Street Railway Act, is unconstitutional, and being the keystone of the act, the whole thereof must fall upon its removal; hence the expense and labor of any proceeding under the act should be enjoined. Since we have reached the conclusion that section 10 does not infringe the Constitution, the consequences of the elimination of that section need not be considered.

Under the act any street railway company, operating under a franchise from a city, may, by filing a consent, become subject to all its provisions. Thereafter the company operates under an indeterminate permit, with the right of the city to acquire its property, and the Railroad and Warehouse Commission is henceforth given the exclusive power to fix rates of fare, which rates "shall be just, fair and reasonable and shall be sufficient to yield only a reasonable return on a fair value of the street railway property of the street railway within such city." Section 6. At any time upon application the commission, on notice and hearing, shall determine the fair value of the street railway property and fix the rates of fare, which rates "shall yield * * * a reasonable return on the fair value of its * * * railway property within such city as an operating system." Sections 8, 9. The pertinent parts of section 10 reads:

"Any city or street railway may appeal from any order, ruling or decision of the commission duly made after hearing to the district court of the county in which the city affected by any such order, ruling or decision is located, and said appeal shall be taken and all proceedings thereunder had as provided for by sections 4191 to 4199, both inclusive, General Statutes of Minnesota for 1913 [sections 4650 to 4658, G. S. 1923], so far as the same may be applicable. Upon such appeal the matters involved therein shall be tried and determined by the court without a jury, in the same manner as though originally commenced therein, provided that the findings and order of the commission shall be received in evidence upon such trial but the court shall in no event be bound thereby. * * * Upon any appeal the district court shall have jurisdiction of and shall try the whole matter in controversy including matters of fact as well as law, and make findings upon all material facts, and in any case involving rates or the value of the street railway property shall find and determine the fair value of such property and also what is a reasonable rate of return thereon, and shall affirm, modify or reverse any order or finding of such commission as may be required by law. The judgment or any order of such court shall be certified to said commission and the commission shall thereupon modify, reverse or put into effect its order or findings so as to conform to the judgment, order and findings of such court."

Fixing the rate at which a public utility must render service is concededly a legislative or administrative function. Steenerson v. Great Northern Ry. Co., 69 Minn. 353, 72 N. W. 713. And the contention is that section 10, above quoted, invests the court, the judiciary branch of the government, with legislative powers, thereby contravening article 3 of the state Constitution. No authorities need be cited to the proposition that a duly enacted statute should not be declared unconstitutional if reasonably it may be so construed as not to contravene any provision of the Constitution.

Earnestly it is urged that in language too clear for construction the final determination of the rate is vested in the court; for the trial is de novo; the findings of the commission, though admitted in evidence, do not bind the court; the court shall try matters of fact, as well as law; findings shall be made as to both the value of the property of the street railway and what is fair return thereon; and, finally, the commission must modify, reverse, or put into effect its order so as to conform to the judgment, order, and findings of the court. It, however, is to be noted that nowhere is the court required to fix or determine the rate. The court must make only two specific determinations of existing facts, namely, the fair value of the street railway property and what is a present fair return thereon. To be sure, both are prime factors in fixing the future rate, but there are many others, such as operating expenses, overhead, uncertainties as to patronage, and fluctuation of values bearing upon both earnings and expenses. The act upon which the Steenerson Case was decided gave the court, when disposing of an appeal from the commission, seemingly greater power as a final rate fixer than does section 10 of the act here involved, the provison of the former being:

"The district court shall have jurisdiction to, and it shall, examine the whole matter in controversy, including matters of fact as well as questions of law, and to affirm, modify or reverse such order in whole or in part, as justice may require; and in case of any order being modified as aforesaid, such modified order shall for all the purposes contemplated by this act, stand in place of the original order so modified and have the same force and effect throughout the state as the orders of said commission." Subd. (e) of section 386, and subd. (d) of section 393, Gen. St. 1894.

We have no doubt that the provisions for an appeal to the court in the act involved in the Steenerson Case was in deference to the opinion of the federal Supreme Court in Chicago, Milwaukee & St. Paul Ry. Co. v. Minnesota, 134 U. S. 418, 10 S. Ct. 462, 33 L. Ed. 970, and that section 10 of the act here assailed was influenced by such decisions of that court as Bacon v. Rutland Ry. Co., 232 U. S. 134, 34 S. Ct. 283, 58 L. Ed. 538; Detroit & Mackinac Ry. Co. v. Michigan Commission, 235 U. S. 402, 35 S. Ct. 126, 59 L. Ed. 288; and Ohio Valley Water Co. v. Ben Avon Borough, 253 U. S. 287, 40 S. Ct. 527, 64 L. Ed. 908 — in the first two of which enactments, granting substantially the same powers and duties to the court on appeal from the rate fixed by a commission as in section 10, were held not to confer legislative functions upon the court, and in the last of which the intimation is plain that such a judicial review as is afforded by said section 10, both as to the law and the facts, is essential to a valid rate fixing. In the case last referred to the Supreme Court of Pennsylvania held that the superior court, to which went the appeal from the commission's order fixing rates, erred in substituting its judgment of values, of the factors to be taken into account in fixing rates, for that of the commission in determining that the order of the latter was unreasonable. The federal Supreme Court said:

"The order here involved prescribed a complete schedule of maximum future rates and was legislative in character. Prentis v. Atlantic Coast Line Co., 211 U. S. 210 [29 S. Ct. 67, 53 L. Ed. 150]; Lake Erie & Western R. R. Co. v. State Public Utilities Commission, 249 U. S. 422, 424 [39 S. Ct. 345, 63 L. Ed. 684]. In all such cases, if the owner claims confiscation of his property will result, the state must provide a fair opportunity for submitting that issue to a judicial tribunal for determination upon its own independent judgment as to both...