Great Northern Ry. Co. v. State

• Decision Date: 12 December 1935
• Docket Number: 25732.
• Parties: GREAT NORTHERN RY. CO. v. STATE.
• Court: Washington Supreme Court

52 P.2d 1274

184 Wash. 648

GREAT NORTHERN RY. CO. v. STATE.

No. 25732.

Supreme Court of Washington

December 12, 1935

Department 1.

Appeal from Superior Court, Thurston County; D. F. Wright, Judge.

Action by the Great Northern Railway Company against the State of Washington. From an adverse judgment, the defendant appeals.

Reversed with direction.

G. W Hamilton, of Olympia, and Geo. G. Hannan, of Seattle, for the state.

Thomas Balmer and E. C. Matthias, both of Seattle, for respondent.

STEINERT Justice.

This is an action to recover an alleged excess of fees exacted by the state and paid under protest by the plaintiff to the department of public works. Upon a trial by the court findings of fact and conclusions of law were made, based upon which the court entered judgment for plaintiff. The state has appealed.

At its 1929 session, the Legislature enacted chapter 107, Laws of 1929, p. 209 (amending section 1 of chapter 113, Laws of 1921, p. 354, as amended by section 1, chapter 107, Laws of 1923, p. 290). The 1929 act, which is in question here consists of one section and reads as follows: 'That hereafter every person, firm or corporation engaged in business as a public utility and subject to regulation as to rates and charges by the department of public works, except auto transportation companies and steamboat companies holding certificates under sections 10361-1 and 10361-2, shall, on or Before the first day of April of each year, file with the department of public works a statement on oath showing its gross operating revenue for the preceding calendar year or portion thereof and pay to the department of public works a fee of 1/10 of one per cent of such gross operating revenue: Provided, That the fee so paid shall in no case be less than ten dollars.' Rem. Rev. Stat. § 10417 [P.C. § 5637-1].

Section 2 of chapter 113, Laws of 1921, p. 354, Rem.Rev.Stat. § 10418 [P.C.§ 5637-2], which must be read in connection with the 1929 act, provides that such fees, when collected, shall be paid to the state treasurer and by him deposited in a fund known as the 'public service revolving fund.'

Respondent paid the required fees annually as they became due, but under protest, claiming that the 1929 act, above set forth, was void. This action was begun in March, 1933, to recover the fees paid for the years 1929 to 1932, inclusive, less the amounts admittedly due for those years under other applicable statutes, namely, chapter 107, Laws of 1923, p. 290, Rem. 1927 Supp. § 10417, and chapter 227, Laws of 1929, p. 631, Rem.Rev.Stat. § 3836-1 to 3836-8, inclusive. By stipulation of the parties made during the course of the trial, the complaint was amended to cover the alleged excess of the 1933 fee, which had also been paid under protest.

The court held the 1929 act to be unconstitutional on its face. For the purpose of the record, however, the court admitted evidence tending to show the operative effect of the act, and from such evidence found and concluded that the fees collected by the department were unreasonable and bore no just relation to the cost of regulation and inspection of railroads. Upon these two grounds, the court entered judgment for recovery of the excess amounts of the fees paid. Two questions are thus presented to us for determination: (1) Whether the act is unconstitutional on its face; and (2) whether it is invalid because of its operative effect.

Respondent's main contention is that the act is void on its face, (1) because the fee, or tax, is not imposed for, nor limited by, the reasonable cost of supervising and regulating railroad companies, but is a flat fee imposed on railroad companies, and many unrelated utility companies as well, to pay the expenses of regulating them all, in the aggregate; and (2) because the fee, or tax, is imposed, both on railroad companies and on many unrelated utility companies, to pay not only the expenses incident to their supervision and regulation, in general, but also the expenses of any and all duties and activities of the department, whether regulatory, administrative, police, or judicial. It is contended that because of its unlimited scope, as thus challenged, the act contravenes the Fourteenth Amendment of the Constitution of the United States and also the Fourteenth Amendment of the Constitution of the state of Washington.

The act appears upon its face to be a regulatory one, and this court has recently declared it to be such. Pacific Tel. & Tel. Co. v. Seattle, 172 Wash. 649, 21 P.2d 721, affirmed in 291 U.S. 300, 54 S.Ct. 383, 78 L.Ed. 810. In that case it was also held by this court that the fund created by chapter 113, Laws of 1921, p. 354, § 2, Rem.Rev.Stat. § 10418 [P. C. § 5637-2], supra, was solely for the purpose of defraying the expenses attendant upon the administration of the public service commission law. So we begin with the understanding that the act in question is intrinsically a regulatory one.

In considering the question of the constitutionality of a legislative act, two principles, well settled in this state, must be kept in mind. The first is this: The courts will presume that an act regularly passed by the Legislature is a valid law, and they will not declare it unconstitutional unless it is clearly shown to be so. State v. Walter Bowen & Co., 86 Wash. 23, 149 P. 330, Ann.Cas. 1917B, 625; Litchman v. Shannon, 90 Wash. 186, 155 P. 783; State ex rel. State Reclamation Board v. Clausen, 110 Wash. 525, 188 P. 538, 14 A.L.R. 1133; State ex rel. Carroll v. Superior Court, 113 Wash. 54, 193 P. 226.

The other principle is this: The courts will not take evidence as to the unconstitutionality of a legislative act, but will determine its constitutionality or unconstitutionality from matters that appear on the face of the act itself or from facts of which the courts may take judicial notice. Barker v. State Fish Commission, 88 Wash. 73, 152 P. 537, Ann.Cas. 1917D, 810; State ex rel. Govan v. Clausen, 108 Wash. 133, 183 P. 115; State ex rel. Trenholm v. Yelle, 174 Wash. 547, 25 P.2d 569, 28 P.2d 1119; Ajax v. Gregory, 177 Wash. 465, 32 P.2d 560.

Nothing appears on the face of the act under consideration to indicate, or even suggest, that it is unconstitutional, and there are no facts, supplied by judicial notice, to give it that effect. The act imposes upon all utilities subject to regulation, with two exceptions, a fee, or tax, of one-tenth of one per cent. of their gross operating revenues; the fees to be paid into the public service revolving fund. The two classes of excepted utilities are dealt with in other statutes similar in nature. Auto transportation companies pay into the revolving fund a fee, or tax, of one per cent. of their gross operating revenues. Rem.Rev.Stat. § 6395 [P.C. § 234-11]. Steamboat companies pay into the same fund a fee, or tax, of not to exceed one-fifth of one per cent. of the amount of their gross operating revenues. Rem.Rev.Stat. § 10361-2 [P.C. § 5552-2].

The purpose of the present act being, in our opinion, apparent on its face as one of regulation, and having been so judicially declared, it must be presumed that the Legislature was in possession of advisory facts on which it proceeded when passing the act. It must further be presumed that from the information possessed by it the Legislature concluded that the amount of the fees, as determined by the prescribed rates of percentage, was reasonably necessary to meet the cost of supervising and regulating the respective utilities. We are convinced that the act cannot be declared to be unconstitutional on its face or from facts of which the court can take judicial notice.

Respondent's second contention is that the invalidity of the act was established by the evidence produced upon the trial. Respondent's contention upon this phase of the case, as we understand it, is that evidence is admissible, not so must for the purpose of showing that an act is unconstitutional in its inception, or upon its face, but, rather, to show that the act has become invalid because of its intentional result or by its operative effect. There is eminent authority supporting the principle upon which that contention is based. D. E. Foote & Co. v. Stanley, 232 U.S. 494, 34 S.Ct. 377, 378, 58 L.Ed. 698; Pure Oil Co. v. Minnesota, 248 U.S. 158, 39 S.Ct. 35, 63 L.Ed. 180; Standard Oil Co. v. Graves, 249 U.S. 389, 39 S.Ct. 320, 63 L.Ed. 662; Appalachian Coals, Inc., v. United States, 288 U.S. 344, 378, 53 S.Ct. 471, 77 L.Ed. 825; Wofford Oil Co. v. Smith (D.C.) 263 F. 396; Cleveland Refining Co. v. Phipps (D.C.) 277 F. 463; Lugo v. Suazo (C.C.A.) 59 F. (2d) 386; State v. Bartles Oil Co., 132 Minn. 138, 155 N.W. 1035, L.R.A. 1916D, 193; State v. Standard Oil Co., 100 Neb. 826, 161 N.W. 537, L.R.A. 1917D, 746; Century Oil Co. v. Department of Agriculture, 112 Neb. 73, 198 N.W. 569. It will be found that most of these cases rest upon the commerce clauses of the United States Constitution, art. 1, §§ 8, 10.

In the Foote Case, supra, cited in many of the others, a clear and definite statement of the extent and effect of the principle is given, from which we excerpt a liberal quotation 'Inspection necessarily involves expense, and the power to fix the fee, to cover that expense, is left primarily to the legislature, which must exercise discretion in determining the amount to be charged, since it is impossible to tell exactly how much will be realized under the future operations of any law. Besides, receipts and disbursements may so vary from time to time that the surplus of one year may be needed to supply the deficiency of another. If, therefore, the fees exceed cost by a sum not unreasonable, no question can arise as to the validity of the tax so far as the amount of the charge is concerned. ...