City Of New Haven v. New Haven Water Co. New Haven Water Co.

• Decision Date: 09 January 1946
• Court: Connecticut Supreme Court
• Parties: CITY OF NEW HAVEN v. NEW HAVEN WATER CO. NEW HAVEN WATER CO. v. CITY OF NEW HAVEN.

132 Conn. 496

45 A.2d 831

CITY OF NEW HAVEN

v.NEW HAVEN WATER CO.

NEW HAVEN WATER CO.

v.CITY OF NEW HAVEN.

Supreme Court of Errors of Connecticut.

Jan. 9, 1946.

COPYRIGHT MATERIAL OMITTED.

Appeals from Superior Court, New Haven County; Wynne, Judge.

Appeals from certain orders and decrees of the public utilities commission in the matter of the reates and service of the New Haven Water Company furnished to the City of New Haven and other neighboring towns, and to their inhabitants, brought to the Superior Court in New Haven county and reserved by the court, Wynne, J., for the advice of the Supreme Court of Errors.

Order in accordance with opinion.

See, also, 131 Conn. 456, 40 A.2d 763.

Vincent P. Dooley and A. Frederick Mignone, both of New Haven, for City of New Haven.

Arthur L. Corbin, Jr., William B. Gumbart and J. Stephen Knight, all of New Haven, for New Haven Water Co.

Before MALTBIE, C. J., and BROWN, NENNINGS, ELLS and DICKENSON, JJ.

MALTBIE, C. J.

These cases, coming to us on reservation, are appeals from orders of the public utilities commission with reference to rates of payment for water furnished by the New Haven Water Company to the city of New Haven and several neighboring towns, and to their inhabitants. On August 8, 1939, the company filed with the commission an amended schedule increasing the rates to be charged by it, to go into effect November 1, 1939, and in a letter to the commission transmitting the schedule it stated that it ‘would like’ to put it into effect on that date. On August 14, 1939, the commission, without giving to interested parties notice or an opportunity to be heard, made an ‘order’ which may be summarized as follows: It recited that in October, 1938, the company had ‘presented’ to the commission a report, prepared by its engineer, on ‘a proposed revision of the Company's rates'; then had followed a series of conferences between the commission and representatives of the company and the commission had caused a ‘full study’ of the finances and operations of the company to be made by its own engineers and accountants; as a result of that study and of reports by the company's engineer, the company had modified its proposed schedule; a summary of the results of the investigation was given; and the commission concluded that it ‘now finds no occasion to suspend the effective date of the amended rate schedule as now filed.’ On September 14, 1939, the city first learned of the proposed increase in rates from an advertisement published by the company, and its corporation counsel wrote the commission requesting that a public hearing be held and that, until that hearing, the effective date of the order it had made be suspended. As a result the commission, on October 13, 1939, wrote the company asking assurance by it that it would maintain its books of account in such a way that, in the event of a finding by the commission, or by a court on appeal, against the increase, it could refund to its customers any excess charged above the then existing rates; in reply, the president of the company wrote that it would keep its books in that way; his action was later ratified by the board of directors of the company; and the commission then wrote counsel for the city and the company stating that upon the basis of that assurance it ‘may not suspend’ the effective date of the amended schedule. The city took no further action and the commission held no hearing. Beginning on November 1, 1939, the company proceeded to collect payments from its customers at the increased rates.

On July 25, 1941, the commission, in pursuance of a direction from the governor given under the provisions of § 1414c(d) of the General Statutes, Cum.Supp.1935, issued notice of a hearing for the purpose of determining whether the amended rate schedule of the company was unreasonably discriminatory or more or less than just and reasonable. Hearings were held in pursuance of that notice, limited, however, to a determination of a motion made by the city asking that the commission declare that all charges by the company since November 1, 1939, in excess of the rate schedule previously in force were illegal, and seeking an order that the excess above the rates in existence before that date be refunded, that the company be required to file any proposed schedule of increased rates with the commission, and that it suspend the effective date of such a schedule pending a full hearing at which all interested parties should have an opportunity to appear. The commission, on October 20, 1941, revoked its ‘order’ of August 14, 1939, in which it found no occasion to suspend the effective date of the amended schedule; and it ordered that the company should, with certain exceptions, re-establish the rate schedule in effect before November 1, 1939, with provision that the order become effective as to bills rendered by it on and after January 1, 1942, and that the company should continue to retain the revenues collected by it from November 1, 1939, to January 1, 1942, in excess of the schedule in effect before the former date, pending a final order of the commission after an investigation in was carrying on. Within the thirty days allowed by § 3608 of the General Statutes, the company appealed from that order to the Superior Court. In an appeal to the Superior Court taken by the city under date of August 19, 1943, this order is also included, but the time to appeal from it had then long passed, and to the extent that the appeal was taken from this order it has no standing before us; as, however, the validity of the order is necessarily involved in the appeal taken by the city from the final order of the commission, referred to below, we merely note this in passing. Under § 3612 of the General Statutes, the appeal of the company acted as a supersedeas of the order, thus enabling the company to continue to collect payments in accordance with the amended rate schedule.

The commission thereafter held extended hearings and, on June 21, 1943, issued its final order, in which it held that the amended rate schedule in effect since November 1, 1939, had not been and was not more than just, reasonable and adequate under the provisions of § 1414c(d) of the Cumulative Supplement of 1935 and that the company need not make any refund to its customers of any charges collected since that date. The city appealed to the Superior Court from this order, and that is the other case now before us. The city's claim is, however, restricted to that portion of the order freeing the company from any obligation to make a refund. It maintains that the company has no right to retain the amounts collected by it in excess of the rate schedule in force before November 1, 1939. In support of that contention, it makes alternate claims, first under the provisions of $3599 of the General Statutes, which deals with the powers of the commission over rates existing or charged pursuant to contract, and seconly, under § 1414c(d), which deals generally with the authority of the commission over the rates of public utility companies.

Section 3599 reads: ‘Whenever any rate of any public service company chartered by or organized under the laws of this state shall exist or shall be charged pursuant to charter, contract or any agreement or understanding, and shall be in whole or in any respect discriminatory or more or less than just, reasonable and adequate to provide properly for the public convenience, necessity and welfare, such company or any town, city or borough within which or between which and any other town, city or borough in this state, any such company is furnishing service, or any ten patrons of any such company, may bring a written petition to the commission alleging that such rate is discriminatory or more or less than just, reasonable and adequate. Thereupon the commission shall fix a time and place for a hearing upon such petition and shall mail notice thereof to the parties in interest and give due public notice thereof at least one week prior to such hearing. Upon such hearing, the commission may, if it shall find such rate to be discriminatory or more or less than just, reasonable and adequate to enable such company to provide properly for the public convenience, necessity and welfare, determine and prescribe just and reasonable maximum rates or charges to be thereafter made by such company.’ Under this statute, at least as applied to the first instance, where a company desires to increase its rate schedule above that specified in a contract with any city, it could do so only by petition to the commission, a finding by it that there was ground for increased charges and an order prescribing the rates to be thereafter charged. Wichita R. & Light Co. v. Public Utilities Commission, 260 U.S. 48, 57, 43 S.Ct. 51, 67 L.Ed. 124; Commonwealth v. Shenandoah R. L. Corporation, 135 Va. 47, 73, 115 S.E. 695. If this statute applies in the situation before us, the company had no right to put into effect the increased rates prior to the order of the commission made on June 21, 1943, and the excess charges above those permitted before November 1, 1939, were illegally collected.

On February 17, 1902, the company entered into a contract with the city, indefinite in duration, to furnish water to it and its inhabitants at specified rates, subject to future modification only to a limited extent. At the next General Assembly a special act was passed making the contract obligatory upon the city and company, as though specifically authorized in their respective charters. 14 Spec.Laws 1903, p. 276; see New Haven Water Co. v. City of New Haven, 131 Conn. 456, 459, 40 A.2d 763. In 1927, the company brought an action against the city for a declaratory judgment and one of the questions asked was whether the rates prescribed in the contract were unlaterable or were subject to be increased by the commission if it found that they were discriminatory or more or less than just,...