State v. Tri-State Tel. & Tel. Co.
| Decision Date | 24 February 1939 |
| Docket Number | 31572. |
| Citation | 284 N.W. 294,204 Minn. 516 |
| Parties | STATE v. TRI-STATE TELEPHONE & TELEGRAPH CO. (CITY OF ST. PAUL et al., Interveners). FN58 |
| Court | Minnesota Supreme Court |
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Appeal from District Court, Ramsey County; Gustavus Loevinger, Judge.
Proceeding wherein the Railroad and Warehouse Commission of the state of Minnesota reduced existing rates for exchange services within the St. Paul metropolitan exchange area to be charged by the Tri-State Telephone & Telegraph Company, and wherein the City of St. Paul and the City of South St. Paul intervened. From a judgment of the district court on appeal from the commission's order, the Tri-State Telephone & Telegraph Company appeals.
Judgment affirmed.
Syllabus by the Court .
1. Rate making for the future is an inherently legislative act whether done by the legislature directly or by an administrative body to which is delegated the duty of fixing rates in detail, and the orders of such tribunals are subject to the same tests and command the same regard as enactments of the legislature.
2. In rate proceedings the commission must make findings of fact sufficiently specific to enable the court to determine whether it has complied with all statutory requirements and whether all substantial rights of the company have been observed.
3. All essential facts on which the order of the commission is based must be found, but that body is not obligated to display the weight given by it to any part of the evidence or to disclose the mental operations by which it reached its result.
4. Due process has been accorded the company by the commission in respect to its findings of fact.
5. The powers of the reviewing court are purely judicial and lack legislative attributes. Its function is to protect constitutional rights, not to sit as a board of revision with appellate legislative authority to substitute its own judgment for that of the commission.
6. Where the legislature itself fixes rates, acting within the field of legislative discretion, its determinations are conclusive; and where the legislature establishes a rate fixing body to act within this same field, it may endow such body with power to make findings of fact which are conclusive, provided the requirements of due process are met by according a fair hearing and acting upon the evidence and not arbitrarily. In such cases, the judicial inquiry into the facts goes no further than to ascertain whether there is evidence to support the findings.
7. The Constitution limits the rate making power by prohibiting deprivation of property without due process of law or the taking of private property for public use without just compensation.
8. When properly challenged as exceeding these limitations, acts of the legislature or its agent in rate making are necessarily subject to judicial review upon the facts and the law.
9. In determining whether a rate is confiscatory, the judicial scrutiny must of necessity take into account the entire legislative process, including the reasoning and findings upon which the legislative action rests; the court will not interfere with the exercise of the rate making power unless confiscation is clearly established.
10. Respecting issues other than confiscation, the reviewing court may overthrow the order of the commission only when that board has so abused its discretion as to render its action arbitrary.
11. The just compensation assured a utility by the Fourteenth Amendment to the Federal Constitution, U.S.C.A., is a reasonable return on the value of the property at the time it was used in the public service. Rates which do not afford such a return are confiscatory.
12. ‘ Fair return’ is computed with reference to the ‘ fair value’ of property used or shortly to be used in rendering that service, the rates for which are in controversy. When used for other purposes also, the property must be apportioned according to its employment in each.
13. In fixing the ‘ fair value’ of the property, it is proper to consider historical cost (the cost of the original plant plus additions, less retirements and accrued depreciation) provided consideration is given to changes in the price level; reproduction cost at the time of the inquiry, less accrued depreciation, provided the reproduction costs of the components can be found with reasonable certainty; the financial history of the company and all other relevant facts.
14. Annual depreciation charges may be determined by computing and weighing the losses from depreciation for each class of property, provided there is some relation between the depreciation reserve fund and the amount of actual depreciation which has accrued.
15. The findings of the trial court show that full consideration was given every element affecting the rate base, and the valuation allowed by the court is reasonably adequate.
16. Properly included in exchange revenues are revenues derived from property used to render interurban service, the value of which property is included in the rate base, and a share of the revenues derived from toll charges for long-distance calls originating in the area, provided such toll charges are not also assessed to subscribers and provided further that the share is related to the cost of the use of the facilities used and maintained to connect the subscribers' station to the toll switchboard.
17. Accepting the company's figures as to operating expenses would not reduce the annual rate of return to the company below six per cent, which the commission fixed as fair and which the company does not dispute.
18. The findings of the commission and the court are not arbitrary and the rates prescribed are not confiscatory.
C. B. Randall and Ralph A. Stone, both of St. Paul, Tracy J. Peycke and F. E. Randall, both of Omaha, Neb., and E. A. Prendergast, of Minneapolis, for appellant.
John W. McConneloug and Louis P. Sheahan, both of St. Paul, for intervener-respondent City of St. Paul.
Walter T. Ryan, of St. Paul, for intervener-respondent City of South St. Paul.
Wm. S. Ervin, Atty. Gen., and David J. Erickson, Deputy Atty. Gen. (Eugene W. Reed, of St. Paul, of counsel), for respondent.
Appeal by the Tri-State Telephone and Telegraph Company from a judgment of the district court affirming an order of the railroad and warehouse commission of Minnesota reducing existing rates for exchange services within the St. Paul metropolitan exchange area.[1] Generally stated the issues are (1) whether the findings of the Commission as well as those of the district court constitute a denial of due process; and (2) whether the rates prescribed by the commission and approved by the district court are confiscatory.
The Commission.-Authority to investigate and regulate intrastate telephone rates is placed with the commission. 1 Mason, Minn.St.1927, §§ 4641, 5291. Rate making for the future is an inherently legislative act whether done by the legislature directly or by a subordinate or administrative body to which is delegated the duty of fixing rates in detail, and the orders of such tribunals command the same regard and are subject to the same tests as enactments of the legislature. Chicago & G. T. Ry. Co. v. Wellman, 143 U.S. 339, 12 S.Ct. 400, 36 L.Ed. 176; Knoxville v. Knoxville W. Co., 212 U.S. 1, 29 S.Ct. 148, 53 L.Ed. 371; Bluefield W. W. & I. Co. v. Public Service Commission, 262 U.S. 679, 43 S.Ct. 675, 67 L.Ed. 1176; Arizona Grocery Co. v. Atchison, T. & S. F. R. Co., 284 U.S. 370, 52 S.Ct. 183, 76 L.Ed. 348.Being a legislative power, the rate making power implies a range of legislative discretion which necessarily extends to the processes by which the legislative determination is reached. Los Angeles G. & E. Corp. v. Railroad Commission, 289 U.S. 287, 53 S.Ct. 637, 77 L.Ed. 1180; St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 56 S.Ct. 720, 80 L.Ed. 1033.Where that discretion is free to operate, its choice is uncontrolled by courts exercising supervisory jurisdiction. Dayton P. & L. Co. v. Public Utilities Commission, 292 U.S. 290, 54 S.Ct. 647, 78 L.Ed. 1267.
The Commission's Findings.-An administrative body, even when acting quasi-judicially, is free of many of the procedural checks which circumscribe the action of a court. Interstate Commerce Commission v. Louisville & N. R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431.While the commission must consider all competent evidence, and none that is incompetent, in making its decision (Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288), the erroneous admission of evidence does not render the order invalid. Northern Pacific Ry. Co. v. Dept. of Public Works, 268 U.S. 39, 45 S.Ct. 412, 69 L.Ed. 836.Failure to follow the rules of judicial hearings does not violate due process so long as the substantial rights of the parties are protected. Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524.Reduced to its simplest terms, the purpose of a judicial inquiry into an administrative proceeding is to determine whether the substantial rights of the parties are invaded. Chicago & G. T. Ry. Co. v. Wellman, 143 U.S. 339, 12 S.Ct. 400, 36 L.Ed. 176; Los Angeles G. & E. Corp. v. Railroad Commission, 289 U.S. 287, 53 S.Ct. 637, 77 L.Ed. 1180; Dayton P. & L. Co. v. Public Utilities Commission, 292 U.S. 290, 54 S.Ct. 647, 78 L.Ed. 1267.
The Commission's obligation to make findings in rate proceedings is doubly apparent. To avoid the charge of unlawful delegation of authority to fix rates, the legislature must condition its exercise by the Commission and adherence to the statutory standards must appear in the record of...
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