City of Hillsboro v. Public Service Commission of Oregon

• Decision Date: 14 September 1920
• Citation: 97 Or. 320,192 P. 390
• Parties: CITY OF HILLSBORO v. PUBLIC SERVICE COMMISSION OF OREGON ET AL.
• Court: Oregon Supreme Court

192 P. 390

97 Or. 320

CITY OF HILLSBORO v. PUBLIC SERVICE COMMISSION OF OREGON ET AL.

Supreme Court of Oregon

Sept 14, 1920

In Banc.

Appeal from Circuit Court, Washington County; George R. Bagley Judge.

On petition for rehearing. Petition denied.

For former opinion, see 187 P. 617.

S. B. Huston, of Portland, for appellant.

George M. Brown, Atty. Gen., and J. O. Bailey, Asst. Atty. Gen., for respondent Public Service Commission.

Carey &amp Kerr and C. A. Hart, all of Portland, and Hayden, Langhorne &amp Metzger, of Tacoma, Wash., for respondent North Coast Power Co.

BURNETT J.

The elaborate petition by counsel for the plaintiff, for a rehearing of this case, has had our careful attention. At the outset it urges that the court was in error in holding that the city was an agent of the state. The argument depends upon a misconception of the term "agent" as employed in the court's discussion of the question. Counsel's treatment of the subject depends upon the use of that word as employed in the law of contracts; whereas, in the sense in which it had been used in the various opinions of the court on that subject, it was a synonym for "instrumentality" or "means," signifying that municipal corporations are instrumentalities devised by the state for use in local government. For instance, Mr. Justice Bean in Coleman v. La Grande, 73 Or. 521, 144 P. 468, said:

"However, a city is not constituted as a sovereignty as regards all matters of legislation, but is still to a certain extent a mere agency of the state of which it is a part."

This language was approved by Mr. Justice Harris in Woodburn v. Public Service Commission, 82 Or. 114, 161 P. 391, L. R. A. 1917C, 98, Ann. Cas. 1917E, 996 .

The question here involved is not one of compelling the city to engage in the public service of furnishing water to its inhabitants. The question is: What are the rules of law governing the city after it has voluntarily embarked in such an undertaking? Hence such cases as People ex rel. Park Commissioners v. Detroit, 28 Mich. 228, 15 Am. Rep. 202, People ex rel. v. Mayor of Chicago, 51 Ill. 17, 2 Am. Rep. 278, Asbury v. Albemarle, 162 N.C. 247, 78 S.E. 146, 44 L. R. A. (N. S.) 1189, and Helena Water Co. v. Steele, 20 Mont. 1, 49 P. 382, 37 L. R. A. 412, are not applicable here. Those were instances where in face of a Constitution denying the right to tax the people of a city without their consent, or where charters had lodged in the city authorities the exclusive power to tax for city purposes, the Legislature had undertaken to compel the establishment and maintenance by the city of certain public improvements. The courts very properly held that, while of its own volition the city could construct those improvements and tax its inhabitants to maintain them, no extraneous authority could force the city to do so, because that would amount to the imposition of taxes without the consent of those to be taxed. Such is not the case before us. The city has itself voluntarily contracted for a public water service, and the question is: What is the authority of the state, acting through its Public Service Commission, in such cases?

Ex industria, counsel has favored us with many historical allusions, pointing out that in Rhode Island, Connecticut, and Vermont municipal governments were the primary units of authority. These, also, are not applicable here; for Oregon has never been a mere conglomeration of cities and towns. The primary and paramount source of governmental authority in this state is the people, and they, not any aggregation of petty municipalities, ordained the Constitution, giving the state government, expressed in the three departments of the legislative, the executive, and the judicial, ranking authority. Neither does the decision already rendered in this case deny the power of the city to contract. Nor does it seek to impair the obligation of the contract here involved. All of the cases cited on that subject by counsel are those where the city itself, after having made a contract, sought in some manner of its own motion and by its own authority to violate the agreement. The list of counsel's citations here follows: New Orleans Waterworks Co. v. Rivers, 115 U.S. 674, 6 S.Ct. 273, 29 L.Ed. 525; St. Tammany Waterworks Co. v. New Orleans Waterworks Co., 120 U.S. 64, 7 S.Ct. 405, 30 L.Ed. 563; Walla Walla v. Walla Walla Water Co., 172 U.S. 1, 19 S.Ct. 77, 43 L.Ed. 341; Los Angeles v. Los Angeles City Water Co., 177 U.S. 558, 20 S.Ct. 736, 44 L.Ed. 886; Freeport Water Co. v. Freeport, 180 U.S. 587, 21 S.Ct. 493, 45 L.Ed. 679; Detroit v. Detroit Citizens' Ry. Co., 184 U.S. 368, 22 S.Ct. 410, 46 L.Ed. 592; Cleveland v. Cleveland Ry. Co., 194 U.S. 517, 24 S.Ct. 756, 48 L.Ed. 1102; Detroit United Ry. Co. v. Detroit, 242 U.S. 238, 37 S.Ct. 87, 61 L.Ed. 268; City of Benwood v. Public Service Commission, 75 W.Va. 127, 83 S.E. 295, L. R. A. 1915C, 261; Vicksburg v. Vicksburg Water Co., 206 U.S. 496, 27 S.Ct. 762, 51 L.Ed. 1155. In none of these cases was the right of the state to regulate rates involved.

Neither is it denied that the state by express terms may, either directly or by authorizing a municipal corporation so to do, renounce for a reasonable period its authority to supervise or change rates for public service granted by a regularly promulgated franchise. The argument of counsel seems to concede that formerly the state had a right to regulate rates for public service, but that in this state, since the adoption of the amended form of section 2 of article 11, known as the home rule amendment, that power has been utterly destroyed, and vested entirely in local municipalities in cases where they choose to contract for any public service. As illustrating our conception

of his contention, we take this excerpt from the brief of counsel, commenting upon Salem v. Salem Light & Power Co., 255 F. 295, 166 C. C. A. 465: "The judge who wrote that opinion did not know of the home rule amendment; he did not know that the cities of Oregon exist by virtue of the Constitution of the state, and not by the state, acting through its legislative department."

So far as that is concerned, we are informed by the complaint in this suit:

"That the plaintiff was at all dates and times herein alleged, and now is, a municipal corporation duly incorporated, organized, and existing under and by virtue of the laws of the state of Oregon."

On demurrer this must be taken as true in point of fact. The constitutional provision referred to, so far as applicable to the case in hand, reads thus:

"Corporations may be formed under general laws, but shall not be created by the legislative assembly by special laws. The legislative assembly shall not enact, amend or repeal any charter or act of incorporation for any municipality, city or town. The legal voters of every city and town are hereby granted power to enact and amend their municipal charter, subject to the Constitution and criminal laws of the state of Oregon."

In the same Constitution we read, in section 1 of article 4:

"The legislative authority of the state shall be vested in a legislative assembly, consisting of a Senate and House of Representatives, but the people reserve to themselves power to propose laws and amendments to the Constitution and to enact or reject the same at the polls, independent of the legislative assembly, and also reserve power at their own option to approve or reject at the polls any act of the legislative assembly."

It is hornbook learning that the legislative assembly of the state may enact any law it chooses, subject only to the restraint of the Constitution of the state or of the United States. In other words, the organic law is a restraining, not an enabling, act. The home rule amendment, as regards the legislative assembly, merely restricts its power, so that it cannot create corporations of any kind by special laws, and especially cannot enact, amend, or repeal any particular charter for any single municipality, city or town; but its power to affect municipalities of all kinds by general laws remains unimpaired. This is the doctrine taught by State ex rel. v. Astoria, 79 Or. 1, 154 P. 399, and Rose v. Port of Portland, 82 Or. 541, 162 P. 498.

The law-making power vested in the legislative assembly by section 1 of article 4, as expressed in general laws, still exists with all its original force, so far as concerns municipal corporations. Moreover, there must be in existence a city or town, before the legal voters thereof can enact or amend a charter. It must trace its existence to some state law, either general or special. No body of citizens in unorganized territory can act under that amendment and promulgate a charter. Originally, such forms of government were instituted by special acts of the legislative assembly. The plaintiff in this instance was brought into existence by the act of October 19, 1876 (Laws 1876, p. 108), passed by the legislative assembly of that year. The act of February 21, 1893 (Laws 1893, p. 119), embodied in chapters 1-5 of title 26, L. O. L., was the first legislative effort of the state to provide a general law for the creation of municipal corporations. Other legislation on the subject is found in chapter 345, Laws 1913.

Again given a city or town and legal voters therein, their activities in forming or amending a municipal charter are circumscribed by the Constitution and criminal laws of the state of Oregon. Manifestly, they are subordinate instrumentalities of government. They are "subject to the Constitution and criminal laws of the state of Oregon." To be subject to the Constitution is to be controlled by all that the legislative assembly lawfully may do under that Constitution, and, as we have seen, the Legislature is simply...