Commonwealth Ex Rsl. Page Milling Co. Inc v. Shenandoah River Light & Power Corp.

• Decision Date: 18 January 1923
• Citation: 115 S.E. 695
• Court: Virginia Supreme Court
• Parties: COMMONWEALTH ex rsl. PAGE MILLING CO., Inc. v. SHENANDOAH RIVER LIGHT & POWER CORPORATION.

115 S.E. 695

COMMONWEALTH ex rsl. PAGE MILLING CO., Inc.

v.SHENANDOAH RIVER LIGHT & POWER CORPORATION.

Supreme Court of Appeals of Virginia.

Jan. 18, 1923.

Proceeding to review an order of the Corporation Commission by the Commonwealth, on the relation of the Page Milling Company, Incorporated, against the Shenandoah River Light & Power Corporation. Affirmed in part, reversed in part, and remanded.

George S. Harnsberger, of Harrisonburg, and Wm. V. Ford, of Luray, for plaintiff in error.

T. Justin Moore, of Richmond, for defendant in error.

PRENTIS, J. The jurisdictional question raised in this case has been well argued and a number of questions closely related to each other have been discussed. We do not think it necessary to follow these elaborate arguments in detail, because, in our view, this question is no longer debatable in this state.

The question is raised by the Page Milling Company, Incorporated (hereafter called the Milling Company), which denies the jurisdiction of the State Corporation Commission (hereafter called the Commission) to regulate the rates to be charged the Milling Company by the Power Company, upon the ground that those rates are prescribed and fixed by their contract of January 1, 1907. This question has been so recently examined and passed upon by this court with reference to franchise contracts between municipalities and public service corporations that we deem it unnecessary to do more than to cite these cases and a few decisions from the Supreme Court of the United States and other jurisdictions, relating directly to such contracts between public utilities and private consumers of their products. Virginia Western Power Co. v. Clifton Forge, 125 Va. 469, 99 S. E. 729, 9 A. L. R. 1148; City of Richmond v. Ches. & Potomac Telephone Co., 127 Va. 612, 105 S. E. 127; Clifton Forge v. Virginia Western Power Co., 129 Va. 377, 106 S. E. 400; Town of Victoria v. Victoria Ice, Light & Power Co., Inc., 134 Va. —, 114 S. E. 92. In order, however, to appreciate the basis of the contention made for the Milling Company, it is necessary to make certain recitals of facts. The facts relied on are thus stated in the petition for appeal:

"That the Luray Electric Company, Incorporated, was chartered under the laws of Virginia in the year 1904, with the general powers of an electric company, the charter for which is filed with the petition in this cause. That by virtue of a contract entered into on February 1, 1905, between the Page Milling Company and the Luray Electric Company for a period of three years, the Page Milling Company was to furnish the Luray Electric Company whatever power it needed during that period, in return for which the Luray Electric Company was to furnish, free of charge, electric current for the lighting of the mill of the Page Milling Company, and also to give the Page Milling Company a certain per cent. of the profits derived from the operation of its business, and it was necessary that the Page Milling Company should consent before the Luray Electric Company had power to sell or to dispose of its plant, or any portion thereof. The Luray Electric Company had acquired easements in the streets of the town of Luray and all of the principal service contracts which were available in said town. Its business was a growing and paying one. That, prior to the incorporation of the Luray Electric Company, there existed in the town of Luray a company whose object and duty it was to furnish gas for lighting purposes. After the Luray Electric Company was incorporated and developed, it became necessary for the owners of the gas company either to go out of business entirely, because the electric service was so far superior to the gas service that every one was beginning to patronize the Luray Electric Company, or else develop an electric plantthemselves. Facing this condition, the owners of the gas company incorporated what is known as the Shenandoah River Light & Power Corporation, the defendant in this cause, for the purpose of developing electricity from the water power which they had acquired on the Shenandoah river. So it can be seen, as is also pointed out in the evidence in this cause, that from the very beginning of the operation of the Luray Electric Company it was in competition with the incorporators and stockholders of the then gas company, who afterwards incorporated the Shenandoah River Light & Power Corporation, and from the very inception of the incorporation and organization of the Shenandoah River Light & Power Corporation that company was in competition with the Luray Electric Company. That by virtue of the contract of 1906 between the Shenandoah River Light & Power Corporation and the Page Milling Company the former obligated itself to furnish to the latter a certain amount of electric power at a stipulated price for a term of 20 years. The consideration for said power on the part of the Page Milling Company was in part the purchase price of its interest in certain property, easements, and franchises owned by the Luray Electric Company, in part its agreement to furnish the transformers and other electric equipment, as stated in said contract, in part the agreement of the Page Milling Company not to use any other power than that furnished by the Shenandoah River Light & Power Corporation, and in part $.00626561 per k. w. h. for the power to be furnished. * * * The power, as called for under the contract, was in the main, and so far as we are now concerned, furnished by the Shenandoah River Light & Power Corporation to the Page Milling Company, without question, until September 1, 1921, when new rates are claimed to have gone into effect."

The new rates of. which the Milling Company is complaining were made effective merely because they were not suspended by the Commission, in accordance with the regulative statutes first enacted in 1914, now Code,

4066 to 4072, inclusive, as amended by the Acts of 1918, p. 413.

There is much emphasis placed upon the relations between the Milling Company and the Luray Electric Company, based upon the fact that the Milling Company organized that company and its stockholders owned a controlling interest in the stock of the Luray Company. While this fact may be worthy of consideration by the Commission, if it shall in future undertake or be asked to accord a favorable classification and rate to the Milling Company, this circumstance does not deny or limit the jurisdiction of the Commission, or affect the proper determination of the jurisdictional question, because it is apparent that there was no copartnership nor identity between these two companies. Indeed, there could not be, for they were organized for different purposes and were in every respect separate legal entities. The consideration paid by the appellee, the Power Company, to the Luray Company for its assets constituted the full and complete consideration for that transfer. That there was a consideration for the contract between the Milling Company and the Power Company at the time it was entered into is also apparent, but this feature is common to all rate contracts between public service corporations and their patrons claiming thereunder.

Taking up the several contentions of the appellant, so far as it seems to be necessary, it is claimed:

1. That the acts of 1914 and subsequent enactments, which vested the Commission with the power to control, regulate, and prescribe the light and power rates of such public service corporations, operate prospectively only, and that to apply the new schedule of rates which became effective September 1, 1921, to the service furnished the Milling Company by the Power Company would be to give these acts a retroactive effect.

The Commission deals with this contention thus:

"Prior to the enactment of the Utilities Act, all rates of public utility companies were the result of agreement, express or implied, between these companies and their customers, and if, therefore, all such rates were beyond the control of the Commission, the jurisdiction conferred by the act would have been practically nil. We cannot believe or hold that the Legislature contemplated a result so futile and absurd.

"It is significant, also, that in the many cases involving utility rates heard by the Commission this contention does not appear to have been advanced by any of the able and astute counsel participating therein, nor does it appear to have occurred to the Supreme Court in arriving at its decision in City of Richmond v. C. & P. Tel. Co., 127 Va. 612, 105 S. E. 127. In that case, while holding that the franchise contract between the telephone company and the city was not binding upon the state, it was nevertheless recognized, in conformity with an unbroken line of authority, that the franchise was a contract binding upon the parties thereto, unless and until the police power of the state was invoked to prevent the operation of its rate provisions. The jurisdiction of the Commission, under sections 4052 and 4054 of the Code of 1919, over the rates established by franchise contract prior to the passage of the legislation referred to, was sustained, notwithstanding the valid contract inter partes, although the point now in issue was not discussed."

Of course there can be no doubt about the general rule that statutes operate prospectively, and not retroactively; but it is illogical to say that the construction which the Commission has given to these statutes gives them a retroactive effect, for it is not claimed that the rates charged or collected for service performed before they became effective can in any way be affected thereby. Clearly these statutes operate prospectively, and only upon such rates as are thereafter lawfully prescribed pursuant thereto.

There are two recent decisions of the Supreme Court of the United States which con-clusively deny this contention. There is certainly a suggestion of finality in this language of Mr. Justice Clarke in Union Dry Goods Co....