Homestead Co. v. Des Moines Electric Co., 4889.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Citation: 248 F. 439
• Docket Number: 4889.
• Parties: HOMESTEAD CO. v. DES MOINES ELECTRIC CO.
• Decision Date: 07 January 1918

248 F. 439

HOMESTEAD CO.
v.
DES MOINES ELECTRIC CO.

No. 4889.

United States Court of Appeals, Eighth Circuit.

January 7, 1918

[248 F. 440]

Frank S. Dunshee, of Des Moines, Iowa (Robert M. Haines and Joseph I. Brody, both of Des Moines, Iowa, on the brief), for plaintiff in error.

Frank T. Jensen and Charles S. Bradshaw, both of Des Moines, Iowa, for defendant in error.

Before SANBORN, CARLAND, and STONE, Circuit Judges.

SANBORN, Circuit Judge.

The question which this case presents is the sufficiency of the facts stated in the complaint to constitute a cause of action, and it is brought to the attention of this court by a writ of error to reverse an order and judgment which sustained a general demurrer.

The grievance of the plaintiff is that the defendant, Des Moines Electric Company, a public service corporation, that was engaged in furnishing light and power to the plaintiff, and to other consumers thereof, in the city of Des Moines, unjustly discriminated against the plaintiff in the rates it charged and collected for the light and power it furnished, in that (count 1) it charged and collected of the plaintiff's competitor in that city, the Register & Leader Company, a corporation, only about 40 per cent. of the amount charged and collected of the plaintiff for contemporaneous service for like operations under substantially similar circumstances and conditions, to the plaintiff's damage in the sum of $2,950.94, which was 60 per cent. of the amount the plaintiff paid for the defendant's service in the operation of that part of its business in competition with the business of the Leader Company; (2) in that (count 2), while the defendant charged and collected of many of its other customers low and reasonable rates, it charged and collected of the plaintiff for similar service higher rates that were unreasonably exorbitant, and $4,918.23 in excess of reasonable, [248 F. 441] just, and compensatory rates; and (3) in that (count 3) the defendant divided its customers by a specified standard into wholesalers and retailers, and established a low and reasonable rate for its service to wholesalers and a higher rate for its service to retailers, that by the specified standard the plaintiff was a wholesaler, but the defendant charged and collected of it the retail rates, under the false representation that it was serving the plaintiff at rates as low as it was serving any of its customers in a like situation, when the fact was that it was exacting from the plaintiff $2,321.80 more than it would have collected from it, if it had collected the wholesale rates, and was thereby charging and collecting unreasonably exorbitant rates, $2,321.80 in excess of reasonable and compensatory rates.

The first count of the complaint set forth these facts: During all the time in which the plaintiff alleged that the defendant was exacting from it discriminatory and exorbitant rates, those rates did not exceed the maximum rates which, by an ordinance of the city of Des Moines, the defendant was expressly authorized to charge and collect for furnishing the light and power. During this time the plaintiff was printing a newspaper and operating a job printing, electrotyping, and photo-engraving plant, and the Leader Company was running two daily newspapers and a job printing and photo-engraving plant. The job printing and photo-engraving plant of the Leader Company was operated, as was the plaintiff's like plant, by a large number of motors for the most part in the daytime. The light and power to operate each of them were furnished by the defendant during the same time under like conditions. The two plants put forth the same kind and quality of work, the owners of these plants bought and sold in the same market, and the Leader Company was the plaintiff's most active competitor. There was an established market value for the products of the two plants, so that the plaintiff was unable to charge more for its output than was charged by the Leader Company for its similar products. The defendant during the time specified furnished the Leader Company the light and power to operate its job printing and photo-engraving plant at a rate which was only about 40 per cent. of the rate it charged and collected for the light and power it furnished the plaintiff to operate its like plant. The Leader Company, by reason of receiving this light and power at a rate which was 40 per cent. of the rate collected of the plaintiff, was enabled to and did put out its product more cheaply than the plaintiff could send its output forth, was enabled to and did bid under the plaintiff in making competitive prices for printing and photo-engraving, the plaintiff was obliged to meet the prices set by the Leader Company in order to hold its printing and photo-engraving business, its overhead expense was unduly increased by the high rates the defendant exacted from it, and it 'was deprived of its fair, legitimate profit, and damaged' to the extent of $2,950.94, which is 60 per cent. of the amount it paid the defendant for the light and power which the latter furnished to operate its job printing and photo-engraving plant.

The sufficiency of these facts to constitute a cause of action for unjust discrimination is denied on the grounds (a) that the plaintiff [248 F. 442] is not entitled to recover on account of such discrimination the difference between the amount it paid and the amount it would have paid at the rate its competitor enjoyed, and that that difference is not the measure of its damages; (b) that the facts pleaded failed to show that the plaintiff and the Leader Company were situated alike; and (c) that they do not disclose facts sufficient to sustain a recovery for loss of profits.

The sufficiency of the facts set forth in the second and third counts, each of which is based on a claim that the rates charged to and collected by the plaintiff were exorbitant and unreasonable, because they exceeded those charged and collected of other consumers, and by each of which the plaintiff seeks to recover as money had and received the difference between the amount the plaintiff paid and the amount it would have paid, if the rates to it had been just and reasonable, is denied on the ground that, where maximum rates are prescribed for the service of a public service corporation by a state or a municipality lawfully empowered so to do, no individual consumer or party interested in the rates, who has paid rates not exceeding the prescribed limit, may maintain an action against the corporation on the ground that those rates were unreasonable or exorbitant.

There have been conflicting decisions and there has been much discussion about some of the questions which the propositions asserted by counsel present. But a review of the opinions of the courts and a thoughtful consideration of the arguments of counsel have convinced that the stronger reasons and the weight of authority have established these rules of law by which the decision of the question presented in this case must be determined.

It is the duty of a public service corporation, lawfully authorized to use the streets and public places of a municipality in order to furnish to consumers water, gas, electricity, light, heat, power, or any other public utility, to render like contemporaneous service for like compensation to consumers conducting like operations under like conditions and circumstances. For unjust discrimination between competitors, and substantial injury to one of them caused by a breach of this duty, the injured competitor may maintain an action in tort against the public service corporation for the pecuniary loss inflicted upon him by such discrimination. Curtis on Electricity, Sec. 36; Western Union Telegraph Co. v. Call Publishing Co., 181 U.S. 92, 99, 100, 21 Sup.Ct. 561, 45 L.Ed. 765; Pennsylvania R.R. Co. v. International Coal Co., 230 U.S. 184, 203, 204, 33 Sup.Ct. 893, 57 L.Ed. 1446, Ann. Cas. 1915A, 315; Armour Packing Co. v. Edison Electric Illuminating Co., 115 A.D. 51, 100 N.Y.Supp. 605, 607; St. Paul Book & Stationery Co. v. St. Paul Gaslight Co., 130 Minn. 71, 153 N.W. 262, 266, Ann. Cas. 1916B, 286.

Unjust discrimination will not sustain an action against a public service corporation, in favor of the injured competitor, for the difference between the amount he paid and the amount he would have paid if he had paid at the same rate as his competitor similarly situated for like service, as for money had and received, or any other action at law, except an action in tort for his damages. Nor is such [248 F. 443] difference the measure of his damages. They may be the same as, or more or less than, such difference, and they must be pleaded and proved before they may be recovered. Pennsylvania R. Co. v. International Coal Co., 230 U.S. 184, 198, 200, 201, 202, 203, 206, 33 Sup.Ct. 893, 57 L.Ed. 1446, Ann. Cas. 1915A, 315; Meeker & Co. v. Lehigh Valley R.R. Co., 236 U.S. 412, 429, 35 Sup.Ct. 328; Lehigh Valley R.R. Co. v. Clark, 207 F. 717, 724, 725, 731, 125 C.C.A. 235; Lehigh Valley R. Co. v. American Hay Co., 219 F. 539, 541, 542, 135 C.C.A. 307; Knudsen-Ferguson Fruit Co. v. Michigan Central R. Co., 148 F. 968, 79 C.C.A. 46; Hoover v. Pennsylvania R. Co., 156 Pa. 220, 27 A. 282, 290, 22 L.R.A. 263, 36 Am.St.Rep. 43.

In the making, regulation, and litigation regarding rates, 'unreasonable rates' are either those that are so low as to be noncompensatory, or those that are so much higher than merely compensatory rates that they are exorbitant. The fact that two rates, or two sets of rates, are unjustly discriminatory, neither establishes nor necessarily implies that either of them is 'unreasonable.' Interstate Commerce Comm. v. Baltimore & Ohio R.R. Co., 145 U.S. 263, 277, 12 Sup.Ct. 844, 36 L.Ed. 699; American Express Co. v. South Dakota, 38 Sup.Ct. 656 (U.S. Supreme Court opinion filed June 11, 1917).

A public service corporation furnishing its...