Louisiana Water Co. v. Public Service Commission of Missouri

• Decision Date: 11 December 1923
• Docket Number: 35.
• Citation: 294 F. 954
• Parties: LOUISIANA WATER CO. v. PUBLIC SERVICE COMMISSION OF MISSOURI et al. (CITY OF LOUISIANA, Intervener).
• Court: U.S. District Court — Western District of Missouri

294 F. 954

LOUISIANA WATER CO. v. PUBLIC SERVICE COMMISSION OF MISSOURI et al. (CITY OF LOUISIANA, Intervener).

No. 35.

United States District Court, W.D. Missouri, Central Division.

December 11, 1923

[Copyrighted Material Omitted]

Matson & Cowherd, of Louisiana, Mo., and Warren R. Voorhis, of New York City, for complainant.

L. H Breuer, Gen. Counsel, of Rolla, Mo., and Frank E. Alwood Asst. Gen. Counsel, of Carrollton, Mo., for defendant Public Service Commission.

J. E. Pew, City Atty., and Pearson & Pearson, all of Louisiana, Mo., for intervener.

REEVES District Judge (after stating the facts as above).

1. Complainant is entitled to demand a fair return upon the reasonable value of its property at the time such property is being used for the public. San Diego Land & Town Co. v. National City, 174 U.S. 739, loc. cit. 757, 19 Sup.Ct. 804, 43 L.Ed. 1154; San Diego Land & Town Co. v. Jasper, 189 U.S. 439, loc. cit. 442, 23 Sup.Ct. 571, 47 L.Ed. 892; Denver v. Denver Union Water Co., 246 U.S. 178, loc. cit. 190, 191, 38 Sup.Ct. 278, 62 L.Ed. 649. There is no controversy here as to the value claimed by complainant, and upon such valuation the Commission has heretofore determined 7 1/2 per cent. as a fair and reasonable return, with an allowance of 2 per cent. for depreciation. It is the law that, where the rate fixed by the Legislature or a subordinate body, to whom the power has been delegated, does not furnish a fair return upon the reasonable value of the property at the time it is being devoted to the public use, such act is so confiscatory in its effect as to violate the Constitution of the United States. Bronx Gas & Electric Co. v. Public Service Com'n, 190 A.D. 13, 180 N.Y.Supp. 38, loc. cit. 44; Willcox v. Consolidated Gas Co., 212 U.S. 19, loc. cit. 41 and 51, 29 Sup.Ct. 192, 53 L.Ed. 382, 15 Ann.Cas. 1034, 48 L.R.A. (N.S.) 1134. Moreover, no rate of return can be deemed reasonable which is not high enough to attract capital to the form of investment involved in utility properties, and a return of 8 per cent. upon the fair value of such utility properties has been held to be reasonable. Alton Water Co. v. Illinois Commerce Commission (D.C.) 279 F. 869, loc. cit. 873; City of Toledo v. Toledo Rys. & Light Co., 259 F. 450, loc. cit. 455, 170 C.C.A. 426.

Upon the facts in this case the complainant company, as may be deduced from its schedules of receipts and disbursements, has received practically nothing on account of investment return and depreciation. Defendant Commission in effect admits this, but says that it has raised the rates on behalf of complainant until such 'rates have about reached the limit controlling reasonable rates. ' The slight gain which the consumers might obtain from a refusal to allow an increase in rates is as nothing compared with the loss that each consumer would sustain if ruin should be brought to this utility because of refusal to allow it a just return for its service and for depreciation. The defendant Commission has undertaken the delicate and dangerous function of regulating complainant's rates, and such regulation should be continued with a sense of justice, not only to the complainant, but to the consuming public as well. City of Knoxville v. Knoxville Water Co., 212 U.S. 1, loc. cit. 18, 29 Sup.Ct. 148, 53 L.Ed. 371.

2. From the testimony it is evident that ...