The State ex rel. Washington University v. Public Service Commission of Missouri

• Decision Date: 23 May 1925
• Docket Number: 21950,21951,21952,21953,21954,21955,21956,21957,21958,21959,21960,21961,21962,21963,21964,21965,21966,21967
• Parties: THE STATE ex rel. WASHINGTON UNIVERSITY v. PUBLIC SERVICE COMMISSION OF MISSOURI et al., Appellants
• Court: Missouri Supreme Court

272 S.W. 971

308 Mo. 328

THE STATE ex rel. WASHINGTON UNIVERSITY v. PUBLIC SERVICE COMMISSION OF MISSOURI et al., Appellants

Nos. 21950, 21951, 21952, 21953, 21954, 21955, 21956, 21957, 21958, 21959, 21960, 21961, 21962, 21963, 21964, 21965, 21966, 21967

Supreme Court of Missouri

May 23, 1925

Appeal from Cole Circuit Court; Hon. John G. Slate, Judge.

Reversed.

R Perry Spencer and Jourdan, Rassieur & Pierce for appellants.

The only questions properly reviewable in this case are (a) whether the Commission had jurisdiction to inquire into the public character of the company's business, electric and steam heating, (b) whether the company is or is not a public utility in such businesses, (c) whether the evidence justified the Commission in permitting an increase in the company's rates, and (d) whether the rates allowed are reasonable and not discriminatory. (1) The Commission has power to establish maximum rates for the public utility business defined in the Public Service Act, but the Commission has no power to pass on the effect of such rates upon particular contracts, nor to include or exempt particular contracts from such rates, nor to determine whether the company in entering into particular contracts acted in a private capacity if the subject matter of the contract comes within the act -- nor did the Commission undertake to do so in this case. These are judicial questions. The Commission is not a part of the judicial system authorized by the Constitution. It is an administrative agency of the law-making power. Hence, the circuit court had no power to determine such questions in certiorari proceedings, and no such questions should be considered on this appeal. Lusk v. Atkinson, 268 Mo. 109; Mo. Valley Realty Co. v. Cupples Sta. L. H. & P Co. 199 S.W. 151; Atchison T. & St. F. Ry. Co. v Pub. Serv. Comm., 192 S.W. 460; In re York Water Co., 1918E, P. U. R. 356; United Coml. Travelers v Livery Co., 1918E, P. U. R. 391, 395; In re Independent Sewer Pipe Co., 248 F. 547; Ex parte City of Birmingham, 74 So. 51; People ex rel. v. Straus, 174 N.Y.S. 868. (2) The order of the Commission is a general order fixing rates for electric service and for steam service. It is applicable to all customers, but does not attempt to adjudicate any rights which relators may have to dispute such rates if in conflict with their contracts. (3) If relators have contracts entitling them to rates which cannot be changed by subsequent state regulation, then relators have an adequate remedy. If sued by the company for the increased rates they can plead their contracts and defend at law, or, they may pay under protest, according to the new rates, and recover back the excess by action at law; if the company threatens to discontinue the service because of their failure to pay the increased rates, relators have an adequate remedy in equity for specific performance or by injunction. (4) Under the evidence in this case it is clear that the company is a public utility corporation as to steam heating as well as electric service. (5) The Public Service Act expressly subjects the business of electrical corporations and of steam heating corporations to state regulation, and empowers the Commission to determine and prescribe just and reasonable rates. (6) The question whether there is a public use cannot depend on whether or not the company has a franchise; the validity of the franchise must depend on the question whether there is a public use. It must first be decided whether there is a public use -- if there is then it is subject to state regulation, whether there is a franchise or not. (7) The fact that there is no general ordinance in the city of St. Louis creating steam heating franchises is immaterial. Permits granted by the city to the company authorizing it to use the streets for such purpose and such actual use by the company, tend as strongly to show that the company is in fact engaged in furnishing steam heat as a public utility, as if it were operating under a general ordinance. Insurance Co. v. Lewis, 233 U.S. 389, 406; Munn v. Illinois, 94 U.S. 113, 125. (8) The Legislature has seen fit to regard public heating service as a service "affected with a public interest" and has placed it under the jurisdiction, control and regulation of the Commission. The Legislature had power to do so. Munn v. Illinois, 94 U.S. 113, 125; Insurance Co. v. Lewis, 233 U.S. 389, 406; State ex rel. Subway Co. v. St. Louis, 145 Mo. 551. (9) Rates fixed in contracts with public service corporations must give way to rates subsequently fixed by the Commission, which is charged with the duty of fixing just and reasonable rates. This is true whether the rates fixed by the Commission be increased or decreased, and whether the contract was made before or after the passage of the law creating the Commission. K. C. Bolt & Nut Co. v. L. C. L. & P. Co., 275 Mo. 529; State ex rel. City of Sedalia v. Pub. Serv. Comm., 275 Mo. 201; City of Fulton v. Pub. Serv. Comm., 275 Mo. 67; City of St. Louis v. Public Service Commission, 276 Mo. 528; Kansas City v. Public Service Comm., 276 Mo. 548; Union Dry Goods Co. v. Georgia P. S. C., 248 U.S. 372; Raymond Lbr. Co. v. Raymond L. & W. Co., P. U. R. 1916F, 441; Adams v. Dakota Central Telephone Co., P. U. R. 1916F, p. 579; Pinney & Boyle Co. v. Los Angeles G. & E. Co. L. R. A. (N. S.) 1915C, p. 282, and note. (10) The evidence shows that an urgent emergency existed, due to increased costs of coal and labor and taxes, which compelled the company to ask for relief, if it expected to be able to continue in business and serve the public. But whether an emergency then existed or not is really immaterial. The Commission, upon the evidence before it, had the poyer to establish the rates, and the only question which can now be raised is whether the rates as fixed are reasonable and not discriminatory. (11) The Commission did not err because it failed to declare that such of the relators as were the owners of isolated plants where the function of generating both heat and electricity was combined (Washington University, Income Leasehold Company, St. Louis Brewing Association, Wainwright Real Estate Company, National Bank of Commerce, Stix, Baer & Fuller Dry Goods Company and Ely & Walker Dry Goods Company) belonged to a separate class, and were entitled to lower rates than other customers. Such customers had leased their plants to the company and the company was operating them as a public utility, selling service to them and, in some instances, to other customers from such plants, and therefore the relators, the lessors of such plants, were in the same class with other customers getting similar services from the company. (12) If the Commission had not increased the rates of isolated plant customers, the Commission would have been forced to place the whole burden upon the remaining customers of the company, in order to permit the company to earn a reasonable return on its investment, and such a classification of rates, exempting isolated plant customers, would have been discriminatory. Tap Line Cases, 234 U.S. 1.

Bryan, Williams & Cave for respondents.

(1) The Commission undertook, by its order, to change rates and charges in the private contracts for private service to the Pierce Building and other buildings. This court has held that the question whether public rates fixed by the Commission will supersede rates fixed by private contract, should properly be raised in the proceeding by certiorari to review the ruling of the Commission. K. C. Bolt & Nut Co. v. Light & Power Co., 275 Mo. 529; State ex rel City of Sedalia v. Pub. Serv. Com., 275 Mo. 201. (2) While the Electric Company was a public service corporation in some respects, this fact is in no way inconsistent with the fact that that part of its business which consisted in operation of private isolated plants of private individuals for such individuals was a private business, and not subject to the jurisdiction of the Commission. Chesapeake & Potomac Tel. Co. v. Manning, 186 U.S. 238; Terminal Taxicab Co. v. District of Columbia, 241 U.S. 252; Manufacturers Ry. v. United States, 246 U.S. 494; Notawa Gas Co. v. Henry Oil Co., 269 F. 742. (a) The Public Service Act expressly recognizes the fact that an electrical corporation may be engaged in carrying on "other business than owning, operating or managing" an electric plant, and expressly provides that with respect to such other business said corporation shall not be subject to the provisions of the act. R. S. 1919, sec. 10478, subdv. 13. (b) The question as to whether a particular kind of business done by a public utility corporation is a public service or a private business is to be determined, not by the charter powers of the company, but by the nature of the particular business in question. United States v. Brooklyn Terminal, 249 U.S. 304; Terminal Taxicab Co. v. District of Columbia, 241 U.S. 252; Chesapeake & Potomac Tel. Co. v. Manning, 186 U.S. 238. (c) The State cannot by mere legislative fiat or by any regulating order of a Commission convert into a public utility a work which is in its nature a private business. Producers Transportation Co. v. Railroad Comm., 251 U.S. 228. (3) The operation by the Electric Company of the private plant of the Pierce Building for the use of the Pierce Building under a private contract with the Pierce Building was not a public service. Chesapeake & Potomac Tel. Co. v. Manning, 186 U.S. 238; Terminal Taxicab Co. v. District of Columbia, 241 U.S. 252; State ex rel. Danciger v. Pub. Serv. Comm., 275 Mo. 483; Cawker v. Meyer, 147 Wis. 320; Public Utilities Com. v. Telephone Assn., 270 Ill. 183; State ex rel. v. Spokane Co., P. U. R. 1916D, p. 469; Wyman on Public Service Corporations, sec. 115; Allen v. Railroad Comm., 179 Cal. 68;...