Kansas City Power & Light Co. v. Midland Realty Co.

• Decision Date: 23 April 1936
• Docket Number: 33028
• Citation: 93 S.W.2d 954,338 Mo. 1141
• Parties: Kansas City Light & Power Company, a Corporation, Appellant, v. Midland Realty Company, a Corporation
• Court: Missouri Supreme Court

93 S.W.2d 954

338 Mo. 1141

Kansas City Light & Power Company, a Corporation, Appellant, v. Midland Realty Company, a Corporation

No. 33028

Supreme Court of Missouri

April 23, 1936

Rehearing Overruled March 10, 1936.

Motion to Transfer to Banc Overruled April 23, 1936.

Appeal from Jackson Circuit Court; Hon. T. J. Seehorn Judge.

Reversed and remanded (with directions).

Johnson Lucas, Landon, Graves & Fane for plaintiff-appellant.

(1) The enactment of the Public Service Commission Law and the filing of the schedule of rates thereunder effective August 1, 1917, abrogated all private contract rates for steam heat then in effect. State ex rel. Washington University v. Pub. Serv. Comm., 308 Mo. 328, 272 S.W. 971; State ex rel. Kirkwood v. Pub. Serv. Comm., 330 Mo. 507, 50 S.W.2d 114. (2) The filed rate effective August 1, 1917, having been on file with the Public Service Commission for more than thirty days prior to the effective date and not suspended by the commission, became the lawful rate for steam heating service and was the only lawful rate that could be charged the consumers while effective. Marty v. Kansas City L. & P. Co., 303 Mo. 233, 259 S.W. 793. (3) The rates effective August 1, 1917, were just and reasonable charges for steam heating service. (a) They were presumed just and reasonable from their filing until their unreasonable character is made to appear. Hackworth v. Railroad Co., 286 Mo. 282, 227 S.W. 1032; Marty v. Kansas City L. & P. Co., 303 Mo. 233, 259 S.W. 793. (b) The doubt cast upon their justness and reasonableness by the findings and rulings of the Public Service Commission in case No. 1353, was overcome and destroyed by the subsequent findings and rulings of the commission in case No. 1615. Marty v. Kansas City L. & P. Co., 303 Mo. 233, 259 S.W. 793.

Scarritt, Jones & North for defendant-appellant.

(1) The mere filing of a schedule of heat rates by plaintiff in June, 1917, did not serve to abrogate defendant's contract for its service. (a) The finding of the commission that said schedule was unreasonable and, therefore, unlawful (5 Mo. P. S. C., 682) was conclusive. Laws 1913, p. 645. (b) The mere passage of the Missouri Public Service Commission Act did not serve to abrogate private contracts. Wichita Railroad & L. Co. v. Public Util. Comm., 260 U.S. 48, 67 L.Ed. 124; Ark. Nat. Gas Co. v. Ark. Railroad Comm., 261 U.S. 379, 67 L.Ed. 705. (c) The mere filing of a schedule of rates without any action of the commission thereon, did not serve to abrogate defendant's contract. Wichita Railroad & L. Co. v. Public Util. Comm., 260 U.S. 48, 67 L.Ed. 124; Springfield G. & E. Co. v. Pub. Serv. Comm., 10 F.2d 254; Idaho Power Co. v. Thompson, 19 F.2d 582; Attleboro Steam & El. Co. v. Narragansett El. L. Co., 295 F. 895; Ind. Brewing Co. v. Ry. Co., 4 Mo. P. S. C. 623; Parlin & O. Co. v. Railroad, P. U. R. 1915A, 460; Ark. Fuel Co. v. Railroad Co., 16 I. C. C. 95; Poor Grain Co. v. Railroad Co., 12 I. C. C. 418; Coomes v. Ry. Co., 13 I. C. C. 192; In re N. Y. Steam Co., P. U. R. 1918B, 866; Meeker v. Lehigh Railroad Co., 236 U.S. 412; Texas & P. Ry. Co. v. Oil Co., 204 U.S. 426. (2) The Missouri Public Service Commission Act expressly preserves contracts existing in its passage. Sec. 87, par. 4, Laws 1913, p. 621; Laws 1913, p. 637; Ark. Nat. Gas Co. v. Ark. Railroad Comm., 261 U.S. 379, 67 L.Ed. 705. (3) To permit plaintiff to recover upon the last six counts of its petition, notwithstanding defendant's contract for heat service, would be in violation of the Federal Constitution, which provides that no state shall pass any law impairing the obligation of contracts, and that no property shall be taken without due process of law. Ark. Nat. Gas Co. v. Ark. Railroad Comm., 261 U.S. 379, 67 L.Ed. 705; Wichita Railroad & L. Co. v. Public Util. Comm., 260 U.S. 48, 67 L.Ed. 124; So. Iowa El. Co. v. Chariton, 255 U.S. 539, 65 L.Ed. 764; Ohio & Colo. Smelt. & Railroad Co. v. Public Util. Comm., 68 Colo. 137, 187 P. 1082; Attleboro Steam & El. Co. v. Narragansett El. L. Co., 295 F. 895.

OPINION

Hays, J.

On February 27, 1908, the defendant entered into a contract with the plaintiff whereby plaintiff agreed to furnish steam heating service to defendant for several of defendant's buildings located in Kansas City, according to a certain schedule of rates set forth therein. This contract was for a period of five years beginning September 1, 1908, and ending August 31, 1913, with an option to defendant to extend the same for an additional five-year period by giving written notice. The option was exercised May 29, 1913. Before the contract had thus been extended the Public Service Commission Law of the State was enacted on March 17, 1913, and became immediately effective. [Laws, 1913, pp. 556-651, inc., R. S. 1929, Chap. 33.]

On June 28, 1917, the plaintiff filed a schedule of rates, effective August 1, 1917, for all of its steam heat customers. Under this schedule the rates provided were higher than those provided in defendant's said contract.

Early in September, 1917, Kansas City and numerous users of plaintiff's steam heat service (not including this defendant) filed with the commission complaint against said schedule. After hearings had thereon the commission, on February 11, 1918, found said rates to be "unjust and unreasonable and said rates and prices unreasonably high." [Case No. 1353, 5 P. S. C. Mo. 20.] Thereupon the commission by order fixed and established as just and reasonable a lower schedule of rates and made same effective March 1, 1918. Plaintiff filed a new schedule accordingly. This rate also was higher than defendant's contract rate. It is to be noted that in its case No. 1353 the commission made no attempt to separate or to allocate values and operating expenses as between heating and electrical services, and was unwilling to do so "without further investigation."

On June 11, 1918, plaintiff entered complaint before the commission charging that its rates for electric service and for steam heat were inadequate and confiscatory. This complaint was docketed and heard as case No. 1615. [8 P. S. C. Mo. 223.] In this latter proceeding the commission made the allocation which had been omitted in the other case, predicating the same upon its finding that the rates put into effect March 1, 1918, were "inadequate, unjust and unreasonably low, and that during none of the time was heating revenue sufficient even to meet the fuel expenses alone." And the commission established new rates which displaced the next previous schedule of March 1, 1918. This new schedule did not become effective until December, 1919, as to steam heat, and was even higher than either of the next two preceding schedules. The commission further found that "heretofore the steam heat business had been carried at a loss, and this loss has been borne either by the light and power consumers or by the company. This is a distinctly inequitable condition which must be eliminated as soon as practicable." The findings and order of the commission established in said case No. 1615 were approved by this court in State ex rel. Mary B. Case, v. Pub. Service Comm., 298 Mo. 303, 249 S.W. 955.

After August 1, 1917, plaintiff billed defendant for its steam heating service under the schedule effective on that date until March, 1918, and thereafter under the schedule of the latter date until August 31, 1918, which was the date defendant claimed its contract expired; but defendant refused to pay as billed and made payments still in accordance with the rate in its contract, claiming said rates still to be effective, and such payments were credited on account by the plaintiff; the latter claiming the filed schedule rate was the legal and only rate that could be lawfully charged, and that the defendant's rate contract was void.

This case is for the recovery by the plaintiff from the defendant of the difference between the rates claimed to have been effective and the contract rates for the period August 31, 1917, to March 1, 1918 (pleaded in the first five counts of the petition), and the difference between the rates effective March 1, 1918, and the contract rates for the period from that date to and including August 31, 1918 (pleaded in the last six counts). The court nisi, on a trial without a jury, found against the plaintiff on the first five counts of the petition, and found for the plaintiff on the remaining six counts. Both parties appealed.

The foregoing statement with only slight change is the same as the statement contained in plaintiff's brief and conceded by defendant to be correct. The matters, orders and records referred to in the statement were all introduced in evidence on the trial. Apart from that there was no further evidence save the case of Marty v. Kansas City Light & Power Co., 303 Mo. 233, 259 S.W. 793, which was introduced. There is no dispute between the parties relative to the amount of the overplus of the schedule rates above defendant's contract rate. This case is before this court because of the constitutional questions of alleged impairment of obligations of contract and denial of due process raised as issues of law herein upon the undisputed facts.

The first contention of the parties is upon the legal effect of the rate schedule filed by plaintiff, as to whether the commission made no order between the date it was filed and the effective date, August 1, 1917.

The defendant concedes that the schedule of August 1, 1917, may have been prima facie a legal one upon its filing as to noncontract customers, but was actually not lawful as so determined by the commission upon a hearing thereon and the finding that "said schedule rates were unreasonably high and unjust and, therefore, unlawful." [P. S. C. Case No 1353.] Defendant...