Public Service Commission of Puerto Rico v. Havemeyer

Decision Date06 January 1936
Docket NumberNo. 115,115
Citation56 S.Ct. 360,80 L.Ed. 357,296 U.S. 506
CourtU.S. Supreme Court

[Syllabus from pages 506-508 intentionally omitted] Messrs. Wm. Cattron Rigby, of Washington, D.C. (Benjamin J. Horton, of San Juan, P.R., and Nathan R. Margold, of Washington, D.C., on the brief), for petitioner.

Mr. Ralph S. Rounds, of New York City, for respondents.

Mr. Justice BUTLER delivered the opinion of the Court.

March 19, 1901, the executive council of Puerto Rico granted to the Guanica Land Company, a New Jersey corporation, assignable franchises including the privilege to take water from Guanica Lake for the irrigation of the company's lands. Russell & Co., Sucesores, Sociedad en Comandita, a limited civil agricultural partnership composed of Havemeyer and the other respondents as partners, succeeded to that privilege. March 8, 1929, the Public Service Commission of Puerto Rico made an order canceling it. The District Court of San Juan and the Supreme Court successively sustained the order. Respond- ents' final appeal was to the Circuit Court of Appeals; it held the order unreasonable, reversed the judgment of the Supreme Court, and remanded the case for further proceedings. 74 F.(2d) 637.

Notwithstanding absence of cross-petition, we may consider respondents' insistence that the commission was without authority to make the order. Langnes v. Green, 282 U.S. 531, 536—538, 51 S.Ct. 243, 75 L.Ed. 520. The petition presents two questions: Whether the Circuit Court of Appeals, a constitutional court of the United States, has jurisdiction to review the commission's order; whether the six individual respondents here are parties in interest entitled to appeal. There is another question adequately raised by the petition though not specified formally as are the others or presented in accordance with the best practice. It is whether the Circuit Court of Appeals erred in holding the order to be unreasonable and in reversing upon that ground the judgment of the Supreme Court.

The Organic Act of 1900, c. 191, 31 Stat. 77, 81, authorized the creation of an executive council, section 18, and provided: 'That all grants of franchises, rights, and privileges or concessions of a public or quasi-public nature shall be made by the executive council, with the approval of the governor, and all franchises granted in Porto Rico shall be reported to Congress, which hereby reserves the power to annul or modify the same.' Section 32, 31 Stat. 83. The Joint Resolution of May 1, 1900, § 3, 31 Stat. 716 (see 48 U.S.C.A. § 752) required that all such grants 'shall provide that the same shall be subject to amendment, alteration, or repeal.'

The franchise, in addition to conferring the privilege of using the water of Guanica Lake for irrigation of their lands, authorized the grantees to construct a wharf in, and to build and operate a railroad along, the harbor of Guanica Bay into which flow the waters of the lake. The irrigation privilege is the only one here involved; its substance follows: The grant was for 99 years and extended to the land company, its successors, and assigns. They were authorized to construct and operate a dam across the outlet for the purpose of regulating the flow of the water from the lake. They were given the right to take up to 20,000,000 gallons a day from the outlet or elsewhere, by gravity, through channels or by pumps, and to construct and operate works therefor. The franchise declared that nothing therein should be construed to permit grantees to raise or maintain the height of the lake above its customary level during the rainy season in years of average and usual rainfall, and they were declared liable for all damage sustained by abutting owners by reason of unduly raising the waters. They were authorized to acquire by eminent domain private lands needed for their works, and were required to have plans for the same approved by the Commissioner of the Interior before commencing work. They were required to pay $300 per year for the irrigation privilege, and in case of default the Commissioner might stop the flow of the water. It was provided: 'That the franchises, privileges and concessions hereby granted, shall be subject to amendment, alteration or repeal.'

The Second Organic Act, approved March 2, 1917, c. 145, 39 Stat. 951 (see 48 U.S.C.A. § 731 et seq.) declares the authority of the Legislature shall extend 'to all matters of a legislative character not locally inapplicable,' section 37 (48 U.S.C.A. § 821) but expressly reserves to Congress the power to annul acts of the Legislature. Section 34 (48 U.S.C.A. § 826). The act also creates a Public Service Commission and declares that all grants of franchises, rights, and privileges of a public or quasi public nature shall be made by it, but not to be effective until approved by the Governor and to be subject to the power of Congress 'to annul or modify the same.' Section 38 (48 U.S.C.A. § 750). It requires such grants to provide that they shall be subject to amendment, alteration, or repeal. Section 39 (48 U.S.C.A. § 752). Section 38 was by section 6, Act of March 4, 1927, amended to empower and direct the commission to discharge such additional duties and functions as might be conferred upon it by the Legislature. 44 Stat. 1420 (48 U.S.C.A. § 750).

The Laws of Puerto Rico, 1917, Act No. 70, requires that all grants of franchises shall be subject to amendment, alteration, or repeal by the commission (section 54), and declares that it shall have power to alter, amend, modify, or repeal any franchise that may have been granted by the executive council, and shall exercise all the rights and powers reserved to the executive council by any such franchise or privilege or by any law. Section 60.

Act No. 70 also regulates the commission's procedure and the appeals from its orders. The testimony before the commission must be taken down. Section 68. Any party to the proceedings thereby affected may appeal from its orders to the District Court of San Juan. Petitions for appeals include assignments of errors. Section 78. The commission is brought in as party defendant; upon the filing of its answer, the case is at issue. The commission is required to certify to the court its proceedings including the testimony, findings, opinions, and orders. Sections 79—82. No evidence may be taken on appeal. Section 86. The court is required to determine whether the order appealed from is reasonable and in accordance with law. Section 83. If found to be so, the court must dismiss the appeal and affirm the order. If found unreasonable, or based pon incompetent evidence or otherwise not in conformity with law, the court must reverse the order or remand to the commission. Section 85. A party aggrieved by the final judgment of the District Court may appeal to the Supreme Court in the same manner and form as in other cases. Section 90. Appeal from the judgment of that court is to the Circuit Court of Appeals for the First Circuit. Judicial Code, § 128(a) (Fourth). 28 U.S.C. § 225(a) (Fourth) 28 U.S.C.A. § 225(a) (Fourth). The Attorney General is required, upon request of the commission, to proceed by mandamus, injunction, or quo warranto to enforce the commission's orders. Section 94.

February 24, 1928, the municipality of Lajas complained to the commission and to the Commissioner of the Interior that the works of the holders of the irrigation privilege were causing irreparable damage by raising waters of the lake above the levels specified in the franchise, and thereby flooding privately-owned lands and public roads. The Commissioner investigated and to the Governor reported: Apparently the situation was created by violation of the provisions of the franchise. The holders failed to submit plans as required. The customary levels of the lake mentioned in the franchise have not been determined. The company has borne none of the damages. There was sufficient cause top request the commission to consider repealing the franchise. The Governor referred the report to the commission. It called on the parties interested to show cause why it should not totally cancel the franchise.

The South Porto Rico Sugar Company, interested in other privileges, and Russell & Co., holder of the irrigation privilege, appeared specially and objected to the jurisdiction of the commission. Before answering the rule to show cause, they brought a suit in the United States Court for Puerto Rico to enjoin the commission from asserting any jurisdiction over them in respect of the franchise. The court dismissed the bill on the grounds that the suit was premature and that the commission had jurisdiction. The Circuit Court of Appeals affirmed. South Porto Rico Sugar Company v. Munoz, 28 F.(2d) 820.

Russell & Co., by its answer to the order to show cause, admits that the water of the lake has been higher than the usual level and has flooded some lands, asserts that it was not raised by the fault of any owners of the franchise, alleges that the holders have spent large sums for works for the taking of water and that cancellation would cause it great loss, maintains that the commission has no jurisdiction over it, and says that, although the partnership had no obligation so to do, it has (since the order to show cause) at its own expense taken steps to lower the waters of the lake to, and also to guarantee that in the future they will not go beyond, customary levels.

Shortly after this answer was interposed, the commission, upon consideration of conditions then existing in and near the flooded area, found partial drainage to be immediately feasible and, by an interlocutory order, called on the holders of the irrigation privilege to prepare a draft of works to lower the level of the lake in order to relieve the overflowed district. The record before us discloses no response or action by the holders.

There was a hearing upon the issues raised...

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