City of Portland v. Public Service Commission of Oregon

• Decision Date: 23 July 1918
• Citation: 173 P. 1178,89 Or. 325
• Parties: CITY OF PORTLAND v. PUBLIC SERVICE COMMISSION OF OREGON ET AL.
• Court: Oregon Supreme Court

173 P. 1178

89 Or. 325

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

Supreme Court of Oregon

July 23, 1918

In Banc.

Appeal from Circuit Court, Multnomah County; J. P. Kavanaugh, R. G Morrow, Robert Tucker, George W. Stapleton, W. N. Gatens, and C. U. Gantenbein, Judges.

Action by the City of Portland, a municipal corporation, against the Public Service Commission of Oregon and another. From a ruling sustaining a demurrer to its complaint, plaintiff appeals. Affirmed.

The city of Portland, a municipal corporation, instituted this suit against the Portland Railway, Light & Power Company, a corporate concern operating a street railway in that city and thereby seeks to nullify an order, made by the defendant the Public Service Commission of Oregon, allowing the company to charge six cents for the transportation of each person over its lines in the same general direction, instead of five cents, as prescribed by an ordinance enacted by the council of the plaintiff and conferring upon the company the franchise under which it operates. A general demurrer to the complaint was sustained by the circuit judges in Multnomah county sitting in banc. The city appealed.

W. P La Roche and Martin L. Pipes, both of Portland (H. M. Tomlinson and Wilson T. Hume, both of Portland, on the brief), for appellant. J. O. Bailey, of Salem (George M. Brown, of Salem, on the brief), for respondent Public Service Commission. Frederick V. Holman and R. A. Leiter, both of Portland (Frederick V. Holman, Griffith, Leiter & Allen, and W. C. Benbow, all of Portland, on the brief), for respondent Portland Ry., Light & Power Co.

BURNETT J.

The essence of the dispute presented in this litigation is whether, upon the application of a public service corporation like the company, the Public Service Commission of the state had the authority to change the rate of fare prescribed by the city ordinances giving the company the right to operate street railways in the city of Portland. The proper disposition of this suit depends upon the solution of that question of jurisdiction. We are not concerned with the wisdom of the Commission's decision. Whether it acted wisely or not in increasing the rate of fare is not for our decision in this case, on demurrer to the bill. If we find that it had jurisdiction to make the change, our quest is ended.

The charter under which the city of Portland operates was embodied in an act of the legislative assembly approved January 23, 1903 (Sp. Laws 1903, p. 1), and approved by a popular vote of the citizens of that municipality. Section 3 of that act declares that the city--

"shall be invested within its limits with authority to perform all public services and with all governmental powers, except such as are expressly conferred by law upon other public corporations and subject to the limitations prescribed by the Constitution and laws of the state, except as hereinafter provided."

Respecting the grant of franchises, the authority therefor is found in section 94, reading thus:

"The council may, subject to the limitations and conditions contained in this charter, grant, for a limited time, specific franchises or rights in or to any of the public property or places mentioned in the preceding sections. Every such grant shall specifically set forth and define the nature, extent, and duration of the franchise or right thereby granted, and no franchise or right shall pass by implication. At all times the power and right reasonably to regulate in the public interest the exercise of the franchise or right so granted shall remain and be vested in the council, and said power and right cannot be divested or granted."

The next following section limits to a period of 25 years the time for which a franchise may be granted, and requires that the amount and manner of compensation to be paid by the grantee shall be fixed, and gives the right to the city to purchase the business and property at the expiration of the grant, if authorized by the voters of the city. A provision is also made for fixing the method of ascertaining the value of the property thus to be acquired by the municipality.

The legislative assembly of this state afterwards passed the act of February 24, 1911, entitled:

"An act to define public utilities, and to provide for their regulation in this state, and for that purpose to confer upon the Railroad Commission of Oregon power and jurisdiction to supervise and regulate such public utilities, and providing the manner in which the power and jurisdiction of such Commission shall be exercised, prescribing penalties for the violation of the provisions of this act and the procedure and rules of evidence in relation thereto, making an appropriation to carry out the provisions hereof, amending section 2 of chapter 53 of the Laws of Oregon for the year 1907, the same being section 6876 of Lord's Oregon Laws, and declaring an emergency." Laws 1911, p. 483.

By proper legislation the Railroad Commission referred to in the act has since been denominated the Public Service Commission. Among other things, any plant or equipment used for the transportation of persons or property by street railways as common carriers is defined by the statute to be a public utility. Section 6 of the law vested the Commission--

"with power and jurisdiction to supervise and regulate every public utility in this state and to do all things necessary and convenient in the exercise of such power and jurisdiction."

Section 7 in part reads thus:

"Every public utility is required to furnish adequate and safe service, equipment and facilities, and the charges made by any public utility for any * * * transportation of persons or property by street railroad, or for any service rendered or to be rendered in connection therewith shall be reasonable and just, and every unjust or unreasonable charge for such service is prohibited and declared to be unlawful."

It is said in section 33:

"The Commission shall provide for a comprehensive classification of service for each public utility and such classification may take into account the quantity used, the time when used, the purpose for which used, and any other reasonable consideration. Each public utility is required to conform its schedules of rates, tolls and charges to such classification."

In sections 41 to 46, inclusive, it is laid down that the Commission may prescribe reasonable rates, etc., after a hearing either on the complaint of any mercantile, agricultural, or manufacturing society, or by any body politic or municipal organization, or by any three persons, firms, corporations, or associations (section 41), or on its own motion (section 45), or on the petition of the public utility itself (section 46). Section 51 empowers the Commission, after investigation, to order the substitution of reasonable rates and charges, instead of those which it shall find to be unjust or unreasonable, and by the following section it may afterwards revise its own decision. Under section 54, any public utility, or other person, persons, or corporation, interested in, or affected by, any order of the Commission fixing

any rates, tolls, charges, schedules, etc., may sue in the county where the hearing was held to set aside the order on the ground that it is unlawful. It is said substantially in section 61 that every municipality shall have power to determine by contract, ordinance, or otherwise the quality and character of service furnished by any public utility within the municipality, and all other terms not inconsistent with the act upon which it may occupy the streets with its plant, and such contract, ordinance, or other determination shall be in force and prima facie reasonable, but upon complaint made by the public utility, or any other qualified complainant, the Commission shall hear and determine the question, and, after it finds the same to be unreasonable, the contract, ordinance, or other municipal determination shall be void:

"Provided, however, that no ordinance or other municipal regulation shall be reviewed by the Commission under this section which was prior to such review enacted by the initiative or which was prior to such review referred to and approved by the people of said municipality or while a referendum thereon is pending."

In substance, it is stated in the complaint that since the adoption of the public utilities statute the city of Portland, operating by the initiative process, amended its charter so as to assume, so far as it had power so to do, the right to regulate and prescribe rates, and other matters, practically the same as the Public Service Commission. It does not appear, however, in that pleading, that the city ever attempted to pass any ordinance changing the previously granted franchise of the company, and it is sufficient to say in this connection that the only acts of the city sought to be reviewed by the Commission in this instance were the ordinances passed by the common council. These were never referred to the people for their approval and were not the subject of the initiative process. Plainly they are not within the restriction of the quoted proviso.

The complaint urges that the state of Oregon did not institute the proceeding whereby the rate of fare was increased from five to six cents. This contention is without merit, for the act of 1911 creating the Commission allows it to act on its own initiative, as well as upon the petition of the public utility itself, or of certain other persons already mentioned. It is also said that the action of the Commission is void, because it violated the constitutional provisions forbidding any state to impair the obligation of a contract, and that it deprived the city of Portland and its inhabitants of their property...