State ex rel. City of Harrisonville v. Public Service Commission of Missouri
| Decision Date | 21 January 1922 |
| Parties | THE STATE ex rel. CITY OF HARRISONVILLE v. PUBLIC SERVICE COMMISSION OF MISSOURI et al.; GREEN LIGHT & POWER COMPANY, Appellant. THE STATE ex rel. CITY OF HARRISONVILLE v. PUBLIC SERVICE COMMISSION OF MISSOURI et al., Appellants |
| Court | Missouri Supreme Court |
Appeal from Henry Circuit Court. -- Hon. C. A. Calvird, Judge.
Reversed.
R Perry Spencer, General Counsel, and James D. Lindsay Assistant Counsel, for Public Service Commission.
(1) The Green Light & Power Company was, and is, an "electrical corporation" (Sub. div. 13, Sec. 10411, R. S. 1919), and subject to the jurisdiction of the Public Service Commission (Sub. div. 5, Sec. 10425, R. S. 1919), being engaged in the manufacture, sale and distribution of "electricity for light, heat and power," and as "owning, leasing operating or controlling" an electric plant, for the manufacture, sale and distribution of electricity, and is under the "general supervision" of the Commission (Sec. 10478, R. S. 1919), as "having authority under any special or general law or under any charter or franchise to . . . erect or maintain wires . . . or other fixtures in, over, or under the streets, highways, and public places of any municipality for the purpose . . . of furnishing or transmitting electricity for light, heat or power," and the supervision extends to the electric "plant owned, leased or operated by any . . . electrical corporation." (2) The company, as an electrical corporation and the city, a municipal corporation, could make no contract whereby the company and the city in respect of service and rates -- the obligation to serve the public on the one hand, and the compensation for that service on the other -- could withdraw the company and the city, or either of them, from the regulatory power of the State, as to either service or rates. Sedalia v. Public Serv. Comm., 275 Mo. 201; Fulton v. Public Service Comm., 275 Mo. 67; Kansas City Bolt & Nut Co. v. Kansas City L. & P. Co., 275 Mo. 529; Pawhuska v. P. Oil & Gas Co., 250 U.S. 394; State ex rel. M., K. & T. Ry. Co. v. Commission, 271 Mo. 270, 286. (3) Under the contract, the city contracted in its proprietary capacity for the receipt of seventy-five dollars per month as rental for its plant, and, in addition, for free service in lighting its streets and public places, and these elements of the contract remain undisturbed by the order of the Commission, but, the further effort of the city, by contract, to fix, not in a proprietary, but in a governmental capacity, rates to be paid by private consumers, for a period of ten years is unavailing as against the regulatory power of the State, and is unmistakeably upon a subject within the exercise of the police power. Authorities above; Kansas City v. Comm., 276 Mo. 539. (4) The Commission in determining valuation and the rates to be charged, took into consideration the original cost of construction, the amount expended in permanent improvements, the present as compared with the original cost of construction, the probable earning capacity of the property under the existing rates, the sum required to meet operating expenses, and all the other pertinent facts ascertainable. Conclusions so reached should be sustained by the court. Smythe v. Ames, 169 U.S. 466; San Diego Co. v. Jasper, 189 U.S. 439; Stanislaus Co. v. San Joaquin Co., 192 U.S. 201; Knoxville v. Knoxville Water Co., 212 U.S. 1; Minnesota Rate Cases, 230 U.S. 352; Gas & Electric Co. v. Lincoln, 250 U.S. 256. (5) The conclusions of the Commissions as to the valuation of the property, and as to the actual and relative amounts of income and expenditures for operation, being supported by the evidence, must be sustained. State ex rel. S.W. Bell Tel. Co. v. Public Service Comm., 233 S.W. 425, and concurring opinion of Blair, J., p. 436. (6) The provision for an adequate income made by the Commission through the rates authorized was reasonable, and the return received under the former rates was inadequate, and in a measure confiscatory. Lincoln Gas Co. v. Lincoln, 250 U.S. 256, 267. (7) The division of the cities and towns involved into two groups and placing Harrisonville in the group, including also Lee's Summit, Pleasant Hill and Holden, was a practical conception and solution of a practical, and otherwise complex, question, indeterminable without intricate and arbitrary niceties of calculations. Making rates for the fifteen cities, including Harrisonville, served from the same generating plant, presented, within certain general fundamental rules, a purely practical problem, which was solved in a practical way in the instant case. Rearick v. Pennsylvania, 203 U.S. 507, 512; Pipe Line Cases, 234 U.S. 548, 560; Public Utilities Comm. v. Landon, 249 U.S. 245.
De Armond & Maxey and Busby, Sparrow & Patterson for appellant, Green Light & Power Company.
(1) The power of the Public Service Commission to prescribe reasonable rates cannot be abrogated or stayed by municipal ordinances or franchise contracts. State ex rel. Sedalia v. Public Service Comm., 275 Mo. 201, 204 S.W. 497; 40 S.Ct. 342; Fulton v. Public Service Comm., 275 Mo. 67, 204 S.W. 386, 40 S.Ct. 342; Puget Sound T. L. & P. Co. v. Public Service Comm., 244 U.S. 574; Elec. Ry. v. Ry. Comm., 238 U.S. 174; Worcester v. St. Ry. Co., 196 U.S. 539; New Orleans v. Water Works Co., 142 U.S. 79; Home Tel. & Tel. Co. v. Los Angeles, 211 U.S. 265; Portland Ry. L. & P. Co. v. Portland, 210 F. 667; Union Dry Goods Co. v. Public Service Corp., 248 U.S. 372; People ex rel. N.Y. & N. S. T. Co. v. Pub. Serv. Comm., 162 N.Y.S. 405, P. U. R. 1917 B, 957; People ex rel. Bridge Co. v. Pub. Serv. Comm., 138 N.Y.S. 434, 153 A.D. 129; Chicago v. O'Connell, 278 Ill. 591, P. U. R. 1917 E, 730; Public Utilities Com. v. Quincy, P. U. R. 1920 B, 313. (2) If the Public Service Commission had permitted the ordinance rates to stand at Harrisonville, then the loss suffered there must have been made up by increased rates from the other towns served -- a result which would have clearly been discriminatory and unfair, and which justified the exercise of the police power. (3) The Public Service Commission, in considering the entire Green plant as a single unified system, and in establishing uniform non-discriminatory rates for it, followed the only fair, practicable and non-discriminatory method possible. The law expressly directs the adoption of such method. Pars. 2 and 3, sec. 10477, R. S. 1919; Brown v. Water Co., 1 Mo. P. S. C. 359; Ben Avon Borough v. Water Co., P. U. R. 1917 C, 420. (4) The evidence before the Commission conclusively showed that the company was earning a return wholly inadequate and insufficient to permit the continuation of its business as a going concern. Under such evidence, the law required an order allowing additional revenue. (a) The evidence establishing the value of the property or rate-base at $ 409,000 was clear and positive. No evidence to the contrary was offered; (b) The evidence of inadequate return in 1919 and proof of still greater loss in 1920 was uncontradicted.
Allen B. Glenn and A. A. Whitsitt for respondent, City of Harrisonville.
(1) The spirit of the policy involved is protection of the public. The purpose in this case is to require the lessor, the city of Harrisonville, to contribute its means to build up an extensive and valuable plant for future use beyond the time of the life of the lease, and the rule cannot be made applicable without discrimination, as between owner and lessor, as to other property acquired, in which the lessee has no interest. (2) The Public Service Commission erred in receiving illegal and incompetent testimony and in giving weight to the audit of T. J. Murphy, Clinton H. Montgomery and Burns & McDonnell appraisement, the same being incorrect. State ex rel. v. Atkinson, 275 Mo. 337; Covington and Lexington Turnpike Co. v. Sanford, 164 U.S. 596; Pond on Public Utilities, sec. 444. (3) The manner of assessment accepted by Public Service Commission of valuing according to sliding scale of four years, which admittedly tended to increase values over purchase price, was unjust and inequitable. State v. Public Serv. Comm., 233 S.W. 425. (4) The acts of the Public Service Commission, when called in question, are required to hear and determine matter involved in such manner as to do full and complete justice in the premises. State v. Public Serv. Comm., 233 S.W. 425; State ex rel. v. Pub. Serv. Comm., 272 Mo. 652. (5) The contract in question, or lease, is such as cannot be interferred with or abrogated by the Public Service Commission. (6) The evidence shows that the city of Harrisonville is paying a reasonable return for all investments and cost of doing business therein. (7) The Public Service Commission arbitrarily and unjustly fixed and made orders and findings against the city of Harrisonville. State v. Pub. Serv. Comm., 233 S.W. 425. (8) The Public Service Commission wrongfully estimated as investment of the Green Light & Power Company the $ 40,000 for business development and $ 14,815.70 for engineering cost and $ 12,438.85 for interest during construction as against Harrisonville, as the business was established when received by said company.
Peyton A. Parks of counsel for respondent.
(1) The reasonableness or justice of an order of the Public Service Commission will be determined by the court upon a review of all the evidence, as in a trial of a suit in equity. State ex rel. v. Pub. Serv. Comm., 272 Mo. 652. (2) The evidence in any case, appealed from the Public Service Commission, is required to be preserved and transferred to the circuit court and that court determines the case on that evidence as in suits in equity. On appeal from circuit court the Supreme Court determines the propriety of the...
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