Knotts v. Nollen
| Decision Date | 13 March 1928 |
| Docket Number | 38931 |
| Citation | 218 N.W. 563,206 Iowa 261 |
| Parties | T. H. KNOTTS et al., Appellants, v. H. S. NOLLEN et al., Appellees |
| Court | Iowa Supreme Court |
REHEARING DENIED JUNE 26, 1928.
Appeal from Polk District Court.--O. S. FRANKLIN, Judge.
Suit for the annulment of a water rate as discriminatory. Decree for defendants. Plaintiffs appeal.
Affirmed.
O. M Brockett, for appellants.
Henry & Henry, for appellees.
The ultimate question is whether the rate or classification given by defendants to apartment houses constitutes an unlawful discrimination against them. Defendants' classification of such buildings for rate purposes is as follows:
"Apartment houses, tenement houses, etc., shall be rated as residences; each suite or set of rooms or apartments occupied separately being rated as one residence."
In addition to service and special charges, defendants have prescribed a sliding meter rate of 30 cents for the first 1,000 gallons per day, 20 cents per 1,000 for the next 4,000 gallons or less per day, and 10 cents per 1,000 for all over 5,000 gallons per day. The benefit of the sliding rate is, in practice, denied to apartment buildings, because of the classification referred to, but is given to the owners of other large buildings, such as the double building of Younker Brothers department store, large office buildings, and transient and family hotels, to which a meter rate is given, and which are thereby enabled to get their water at wholesale or quantity rates. The contention is that to deny to apartment houses the benefit of the meter rates by classifying each apartment as a separate dwelling is an unreasonable and unlawful discrimination.
Rate-making is a legislative or administrative, not a judicial, function. A rate fixed by the proper administrative authority, while it may be annulled if in violation of legal rights, is not subject to readjustment or correction by the court as a reviewing or supervisory body. When it is found that the rate is not unlawful, the duty and authority of the court cease. Cedar Rapids Gas Light Co. v. City of Cedar Rapids, 144 Iowa 426, 120 N.W. 966. The presumption is in favor of the rate or regulation, and the court may interfere only in a clear case of violation of legal rights. Idem. The water plant in controversy is municipally owned, and is operated by the defendants as the board of waterworks trustees of the city. The city, in its ownership and operation of a public utility, is acting in its corporate, and not its public or governmental, capacity. The municipal owner, like a public-service corporation, must furnish its service impartially to all who are similarly situated. It is not permitted to arbitrarily discriminate between its customers, to give one an undue and unreasonable advantage, or arbitrarily subject another to disadvantage and injustice. American Aniline Prod. v. Lock Haven, 288 Pa. 420 (50 A.L.R. 121, 135 A. 726); Hubbell v. Higgins, 148 Iowa 36, 126 N.W. 914; Central Iron & Steel Co. v. Harrisburg, 271 Pa. 340 (114 A. 258). Discrimination, to be unlawful, must be unjust and unreasonable. It must operate to the unjust advantage of one and consequent oppression or disadvantage of another. Elk Hotel Co. v. United Fuel Gas Co., 75 W.Va. 200 (83 S.E. 922). However, absolute uniformity is impossible of attainment. Idem. Classification, within just and reasonable limits, is proper and permissible. The presumption is in favor of the rate and rule established by the rate-making authority. City of Tipton v. Tipton L. & H. Co., 176 Iowa 224, 157 N.W. 844; Town of Woodward v. Iowa R. & L. Co., 189 Iowa 518, 178 N.W. 549. The language of the Supreme Court of the United States, applied to an attack by the utility company upon an established rate, is conversely applicable to an attack by the rate payer.
"'Judicial interference should never occur unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of property under the guise of regulations as to compel the court to say that the rates prescribed will necessarily have the effect to deny just compensation for private property taken for the public use.'" San Diego Land & Town Co. v. National City, 174 U.S. 739, 43 L.Ed. 1154, 19 S.Ct. 804, quoted in Cedar Rapids Gas L. Co. v. City of Cedar Rapids, 144 Iowa 426, 447, 120 N.W. 966; New Haven Water Co. v. City of New Haven, 106 Conn. 562 (139 A. 99).
The rate-making body must necessarily have considerable discretion. Sloan v. City of Cedar Rapids, 161 Iowa 307, 142 N.W. 970; Edgerly & Co. v. City of Ottumwa, 174 Iowa 205, 156 N.W. 388; State ex rel. Lammons v. Commander, 211 Ala. 230 (100 So. 223), and cases above cited. Classification of users is a practical necessity. The line of demarcation between various groups of ratepayers cannot always be clearly defined. Seeming discrimination in favor of one class and against another is quite likely to result, whichever of two classifications is applied. The question is whether there are reasonable grounds for the classification, or whether the classification is arbitrary, discriminatory, unjust, or oppressive.
The theory of the defendants is that the water furnished to an apartment house is, in some form, whether ostensibly so or not, charged ultimately to the occupying families, and that the consumers are not the proprietor, but the families; that to classify an apartment house as a quantity consumer is therefore, to discriminate in favor of families occupying an apartment house, and against those occupying disconnected...
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