CITY OF OPELIKA V. OPELIKA SEWER CO.
| Decision Date | 26 May 1924 |
| Citation | 265 U. S. 215 |
| Court | U.S. Supreme Court |
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES
FOR THE MIDDLE DISTRICT OF ALABAMA
1. A public service corporation is bound by rates fixed by a valid contract between it and a city even if the rates become so unremunerative that, if imposed under the police power, they would be confiscatory in violation of the Fourteenth Amendment. P. 217.
2. Decisions of the Supreme Court of Alabama construing the state constitution and a city charter as permitting the city to grant a sewer company the right to operate in the city for a term of years at stipulated rates, subject to power in the legislature to revoke the contract, held binding in a suit by the company to obtain relief from the rates on the ground that they had become confiscatory. Id.
280 F. 255 reversed.
This is a suit by the Opelika Sewer Company to enjoin the city against preventing the plaintiff by various means at its disposal from putting into effect a schedule of rates that the plaintiff has proposed. It is to be taken that the present rates, which the plaintiff seeks to increase, are confiscatory unless the city has a right to insist upon them, and the question before us is whether the city has that right by contract or whether its enforcement of them deprives the plaintiff of its property without due process of law contrary to the Fourteenth Amendment of the Constitution of the United States, as alleged in the bill. Cincinnati v. Cincinnati & Hamilton Traction Co., 245 U. S. 446. The district court held that there was no valid contract, and issued an injunction as prayed. The city appealed to this Court.
No doubt it is true also that the legislature could not make such a grant indirectly by giving power to a city to make it. But we see no reason to doubt that the legislature, without impairing its power to revoke, may give a city power to make a contract from which the city, of its own motion, may not recede. The city has not attempted to recede from it. So we turn to the charter for light.
The charger of February 20, 1899, gives power "to maintain the health and cleanliness of the city, and, to this end, to adopt and maintain an efficient system of sewerage," § 11,...
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