State ex rel. City of Sedalia v. Public Service Commission

• Decision Date: 05 July 1918
• Citation: 204 S.W. 497,275 Mo. 201
• Parties: THE STATE ex rel. CITY OF SEDALIA, Appellant, v. PUBLIC SERVICE COMMISSION et al
• Court: Missouri Supreme Court

204 S.W. 497

275 Mo. 201

THE STATE ex rel. CITY OF SEDALIA, Appellant, v. PUBLIC SERVICE COMMISSION et al

Supreme Court of Missouri, First Division

July 5, 1918

Appeal from Cole Circuit Court. -- Hon. J. G. Slate, Judge.

Affirmed.

R. S Robertson for appellant.

(1) Councils of cities of the third class have the power and authority to enter into valid and binding contracts for furnishing the city water for fire hydrants without the necessiy of submitting such contracts to the voters. R. S 1909, sec. 9239. (2) Municipalities of Missouri are not creatures of the Legislature, but are creatures of the Constitution, and therefore the Commission was in error in holding that the Legislature had the right to vest in the Commission the power to either legislate for the city, or to act for the city, in waiving the benefits accruing to the city under a contract entered into by the city prior to the creation of the Public Service Commission. Mo. Constitution art. 9; Merchants National Bank of San Diego v. Esconvido Irrigation District, 77 P. 939; Tacoma Ry. and Power Co. v. City of Tacoma, 1917D, P. U. R. 891. (3) If the Legislature had the power and authority as held by the Commission to act for cities in abrogating and cancelling contracts entered into by the city, it has not the power to delegate such authority to some other body or to the Public Service Commission, but must exercise its legislative power vested in it by Section 1 of Article 4 of the Missouri Constitution. Lammert v. Lidwell, 62 Mo. 190. (4) The Commission having found that the contract entered into by the City Water Company for furnishing fire hydrants was a valid contract, and it having been entered into, as the Commission held, with the full sanction of the Legislature as clearly expressed in Sec. 9239, R. S. 1909, then, until the Legislature has in some way clearly expressed an intention to either abrogate and take from the city the benefits of that contract, or to vest in some other body the power to abrogate and take from the city the benefits of the contract, it must stand, and in the law creating the Public Service Commission there was no such intention shown by the Legislature, but the contrary intention was clearly shown. Paragraph 5, sec. 69, Public Service Commission Act, Laws 1913, p. 605; Anderson v. Cortelyou, 68 A. 120. (5) The decision and order of the Commission directly violates the Federal and State Constitutions in that it impairs obligations of contracts and takes from the city its property without due process of law. Mo. Constitution, sec. 15, art. 2; U. S. Constitution, sec. 10, art. 1, and Fourteenth Amendment.

Alex. Z. Patterson and James D. Lindsay for respondent.

(1) The city of Sedalia and the water company in the making of the so-called franchise contract, were bound by cognizance of the fact that their dealings were subject to future exercise of the Legislature's power over rates of public utility companies. Hence, the franchise contract was made subject to the Legislature's making use of the State's inherent power, reserved and not exclusively delegated to the city, to supervise all public service charges. And when the Legislature in its wisdom saw fit to exercise its reserved power of supervision over the matter of public service rates by the creation of a Public Service Commission, and the delegation of rate-making to such Commission, the rates mentioned in the franchise became subject to regulation by such Commission. Puget Sound T. L. & P. Co. v. Public Service Commission, 244 U.S. 574; Milwaukee Elec. Ry. v. Wisconsin Railroad Co., 238 U.S. 174; Worcester v. Street Ry. Co., 196 U.S. 539; New Orleans v. New Orleans Water Works Co., 142 U.S. 79; Home Tel. Co. v. Los Angeles, 211 U.S. 265; Home Tel. & Tel. Co. v. Los Angeles, 155 F. 554 (U.S.C. C. A.); Portland Ry. L. & P. Co. v. City of Portland, 210 F. 667; People ex. rel. N. Y. & N. S. T. Co. v. Public Service Commission, 162 N.Y.S. (App.Div.) 405, P. U. R. 1917 B. 957; People ex rel. Bridge Pp. Co. v. Public Service Commission, 138 N.Y.S. 434, 153 A.D. 129; Chicago v. O'Connell, 278 Ill. 591, P. U. R. 1917 E. 730; Collingsworth Sewerage Co. v. Borough of Collingsworth 102 A. (N. J.) 901; Inhabitants Town of Phillipsburg v. Board of Publ. Utilities Com'rs., 88 A. (N. J.) 1096; Dawson v. Dawson Tel. Co., 137 Ga. 62; City of Woodburn v. Pub. Serv. Comm. 161 P. 391; State v. Superior Ct. of King Co., 120 P. 861, 67 Wash. 37, L. R. A. 1915 C. 287; City of Pawhuska v. Pawhuska, 166 P. 1058; Pioneer Tel. & Tel. Co. v. State, 33 Okla. 724, 127 P. 1073; Duluth St. Ry. Co. v. Railroad Com., 152 N.W. 887; Milwaukee Elect. Ry. & Lt. Co. v. Railroad Com., 142 N.W. 491, 153 Wis. 592; Manitowoc v. Manitowoc & W. Traction Co., 145 Wis. 13, 129 N.W. 925; City of Benwood v. Public Service Comm., 83 S. E. (W. Va.) 295, L. R. A. 1915 C. 261; Turtle Creek v. Pennsylvania Water Co., 243 Pa. 415; Bellevue v. Ohio Valley Water Co., 247 Pa. 91; Yeatman v. Towers, 126 Md. 513.

OPINION

GRAVES, J.

Stripped of all useless verbiage this case involves but one question. By ordinance of the city of Sedalia, duly accepted by the predecessor of the City Water Company of Sedalia, Missouri, it was provided that the rent on city hydrants should be thirty dollars per annum, and certain other water service to the city should be free of charge. This was what is usually called the franchise ordinance. It was never submitted to the vote of the people, but for the question here involved we deem this immaterial. The passage of the ordinance by the City Counsel, and the acceptance thereof by the predecessor of the said City Water Company, constituted a contract between the city and the water company.

From the record here it can be gathered that citizens of the said city complained of the water service, and their complaint was heard by the Public Service Commission, which resulted in the said Public Service Commission requiring the City Water Company to expend something near $ 100,000 for appropriate water reservoirs and other improvements. Thereafter the City Water Company applied to the Public Service Commission for increased rates for their service, both to the city and the general public. This required an investigation as to the valuation of the plant and other matters to be considered upon the question of increasing the rates. The relator here was permitted to intervene in these proceedings, which were consolidated as one. The relator planted its right upon the contract provided for in the ordinance, supra. Other trivial questions were raised, but to our mind they do not merit notice.

The Public Service Commission heard evidence as to the value of the water plant and other subjects proper to be considered upon the question of water rates. The city was a party throughout these hearings. The result was a general raising of rates, and especially a raising of hydrant rentals (which were to be paid by the city) from $ 30 per annum to $ 45 per annum. The ordinance aforesaid was in evidence upon this hearing. Not being satisfied with the rates fixed by the Public Service Commission, the city, by statutory certiorari, took the matter to the circuit court of Cole County, where the reasonableness of the rates fixed by the Public Service Commission was approved by that court, and from such judgment of approval and affirmance this appeal has been taken.

Under the facts of the record the reasonableness of the rates fixed by the Public Service Commission cannot be seriously questioned. This leaves the single question as to whether or not the Public Service Commission had the lawful right to fix a rate, so far as the city is concerned, in excess of the ordinance rate. Such is the case when cleared of all driftwood.

I. The question in this case is one in a number of cases, either here or headed this way. The importance of the question bespeaks care and also requires us to take an invoice as to where we are under the Public Service Commission Act. We have adopted the idea of viewing this act in a kindly spirit by giving it a liberal construction. In State ex inf. v. Kansas City Gas Co., 254 Mo. 515, 163 S.W. 854, we said:

"The act, then, is a highly remedial one filling a manifest want, is worthy a hopeful future, and on well-settled legal principles is to be liberally construed to further its life and purpose by advancing the benefits in view and retarding the mischiefs struck at -- all pro bono publico. Besides all which, the lawmaker himself has prescribed it 'shall be liberally construed with a view to the public welfare, efficient facilities and substantial justice between patrons and public utilities.' [Sec. 127.]"

See also State ex rel. v. Public Service Commission, 259 Mo. 704, 168 S.W. 1156.

Not only so, but we have traced the Public Service Commission Act to the police power of the State. In the Gas Company case, supra, 254 Mo. 534, in speaking of this law, we said:

"That act is an elaborate law bottomed on the police power. It evidences a public policy hammered out on the anvil of public discussion. It apparently recognizes certain generally accepted economic principles and conditions, to-wit, that a public utility (like gas, water, car service, etc.) is in its nature a monopoly; that competition is inadequate to protect the public, and, if it exists, is likely to become an economic waste; that State regulation takes the place of and stands for competition; that such regulation, to command respect from patron or utility owner, must be in the name of the overlord, the State, and to be effective must possess the power of intelligent visitation and the plenary supervision of every business feature to be finally (however invisibly) reflected in rates and quality of service. It recognizes that every...