Territory of Haw. By the Pub. Utilities Comm'n of the Territory of Haw. v. Inter-Island Steam Navigation Co.

• Decision Date: 25 July 1936
• Docket Number: No. 2174.,2174.
• Citation: 33 Haw. 890
• Parties: TERRITORY OF HAWAII BY THE PUBLIC UTILITIES COMMISSION OF THE TERRITORY OF HAWAII v. INTER-ISLAND STEAM NAVIGATION COMPANY, LIMITED.
• Court: Hawaii Supreme Court

33 Haw. 890

TERRITORY OF HAWAII BY THE PUBLIC UTILITIES COMMISSION OF THE TERRITORY OF HAWAII

v.INTER-ISLAND STEAM NAVIGATION COMPANY, LIMITED.

No. 2174.

Argued January 14, 15, 16; June 4, 1936.

Decided July 25, 1936.

Supreme Court of the Territory of Hawai‘i.

ERROR TO CIRCUIT COURT FIRST CIRCUIT. HON. A. M. CRISTY, JUDGE.

Syllabus by the Court

When fees computed by gross income and issued and outstanding capital stock are imposed by legislative authority upon a public utility doing business in the Territory for the purpose of creating a fund to be used exclusively for the maintenance of a commission empowered to exercise supervision over all public utilities coming within its jurisdiction, such fees, even though a portion of the gross income of a utility is derived from its interstate and foreign business, are not prohibited by the commerce clause of the Federal Constitution, nor are such fees prohibited by the imports and exports clauses of the Constitution. They are likewise not affected by the fact that the utility is engaged in the carriage of mail, freight and passengers for the United States government.

When fees for the maintenance of a public utilities commission are determined by legislative enactment, such determination, unless it appears from the Act itself, or by proof that the fees are so discriminatory, and arbitrary and exorbitant as to be the equivalent of a denial of due process of law or of equal protection of the laws, will not be disturbed by the court.

Interest on unpaid amounts due from a public utility for fees required by section 2207, R. L. 1925, is allowable.

J. G. Anthony and N. M. Newmark ( Smith, Warren, Stanley & Vitousek and Robertson & Castle with them on the briefs) for plaintiff in error.

J. R. Cades ( Smith, Wild, Beebe & Cades on the brief) for defendant in error.

C. W. Carlsmith, amicus curiae.

BANKS AND PETERS, JJ., COKE, C. J., DISQUALIFIED.

OPINION OF THE COURT BY BANKS, J.

By written stipulation of the parties which appears in the record, this case was submitted for decision to the court with only two of its justices sitting.

In 1913 the territorial legislature created a public utilities commission and conferred upon it and each of its members certain powers. Among these powers was included the broad one of exercising general supervision over all public utilities doing business in the Territory. More specifically, the commission and each member thereof was empowered to “examine into the condition of each public utility doing business in the Territory, the manner in which it is operated with reference to the safety or accommodation of the public, the safety, working hours and wages of its employees, the fares and rates charged by it, the value of its physical property, the issuance by it of stocks and bonds, and the disposition of the proceeds thereof, the amount and disposition of its income, and all its financial transactions, its business relations with other persons, companies or corporations, its compliance with all applicable territorial and Federal laws and with the provisions of its franchise, charter and articles of association, if any, its classifications, rules, regulations, practices and service, and all matters of every nature affecting the relations and transactions between it and the public or persons or corporations. Any such investigation may be made by the commission on its own motion, and shall be made when requested by the public utility to be investigated, or upon a sworn written complaint to the commission, setting forth any prima facie cause of complaint. All hearings conducted by the commisssion shall be open to the public. A majority of the commission shall constitute a quorum.” R. L. 1925, § 2193.

The commission is also given the following powers: “If the commission shall be of the opinion that any public utility is violating or neglecting to comply with any territorial or federal law, or any provision of its franchise, charter, or articles of association, if any, or that changes, additions, extensions or repairs are desirable in its plant or service in order to meet the reasonable convenience or necessity of the public, or to insure greater safety or security, or that any rates, fares, classifications, charges or rules are unreasonable or unreasonably discriminatory, or that in any way it is doing what it ought not to do, or not doing what it ought to do, it shall in writing inform the public utility of its conclusions and recommendations, shall include the same in its annual report, and may also publish the same in such manner as it may deem wise. The commission shall have power to examine into any of the matters referred to in section 2193, notwithstanding that the same may be within the jurisdiction of the interstate commerce commission, or within the jurisdiction of any court or other body, and when after such examination the commission shall be of the opinion that the circumstances warrant, it shall be its duty to effect the necessary relief or remedy by the institution and prosecution of appropriate proceedings or otherwise before the interstate commerce commission, or such court or other body, in its own name or in the name of the Territory, or in the name or names of any complainant or complainants, as it may deem best.” R. L. 1925, § 2201.

The legislative enactment also contains the following provisions: “There shall also be paid to the commission in each of the months of March and September in each year by each public utility which is subject to investigation by the commission a fee which shall be equal to one-twentieth of one per cent. of the gross income from the public utility business carried on by such public utility in the Territory during the preceding year, plus one-fiftieth of one per cent. of the par value of the stock issued by such public utility and outstanding on December 31 of the preceding year, if its principal business is that of performing public utility services in the Territory. Such fee shall likewise be deposited in the treasury to the credit of the fund. The moneys in the fund are appropriated for the payment of all salaries, wages and expenses authorized or prescribed by this chapter.” R. L. 1925, § 2207.

It was for the recovery of a judgment for these fees alleged to be due for the years 1923--1930 inclusive, and aggregating $33,724.44, that the instant suit was brought. The court below trying the case, jury waived, rendered a judgment in favor of the plaintiff in the sum of $53,435.55, which included principal and interest. The defendant brings the case here on a writ of error.

A preliminary question must first be disposed of. It appears from the record in this case that the defendant did not, prior to the issuance of the writ of error, file with the clerk a bond as required by section 3556, R. L. 1935, but in lieu and instead thereof by stipulation of the parties, deposited with the clerk a certified check for $60,000, that being the amount required by the statute in case a bond had been given. Prior to the argument of the case on its merits doubt was expressed by a member of the court as to whether the giving of a statutory bond was necessary to the jurisdiction of the court and therefore could not be waived by consent of the parties. The court requested briefs on this question. Counsel for the defendant in error asked to be excused from filing a brief on the ground that it might be inconsistent with the stipulation of his client. Thereupon the court appointed Mr. Carl Wendell Carlsmith, a member of the bar, as amicus curiae to render to the court the required service. Elaborate and able briefs were accordingly filed by counsel for plaintiff in error and by the amicus curiae. After careful study of the question the court reached the conclusion that the statutory bond was a procedural and not a jurisdictional matter and hence could be waived. The case is therefore considered on its merits.

The record discloses and it was found by the court below to be a fact that 75% of the defendant's gross annual freight receipts was derived from freight carried by it in commerce with foreign nations and among the several States. From this fact the defendant contends that the judgment under review is erroneous. More specifically the contention is that the fees sought to be collected constitute an unlawful burden upon the defendant's national and international commerce and are therefore in contravention of the commerce clause of the Federal Constitution. In considering this contention it must be remembered that the defendant is a domestic public utilities corporation, having derived its existence and its powers from local legislative authority, and that all its property holdings are located entirely within the Territory of Hawaii and all its activities are there conducted.

When this case was formerly before this court on reserved questions it was definitely held that “it has long since been well established judicially that the investigation and the regulation of public utility corporations is a rightful subject of legislation” and “since the power to investigate exists, the power to exact fees to defray the expenses of such investigations follows.” Territory v. I.-I. S. N. Co., 32 Haw. 127, 131, 138. We are in complete accord with this pronouncement and reaffirm it as being entirely sound. With this in mind let us inquire whether the commerce clause of the Federal Constitution was violated by the imposition of the fees in question. The powers conferred by the legislature upon the public utilities commission are very comprehensive and are summarized as follows: To supervise all public utilities doing business within the Territory. There was thus delegated to the commission, so far as these utilities are concerned, the great police power of the Territory. It is by the exercise of this power that the Territory, through its commission, is enabled to ascertain whether any public utility coming within its...