William Willcox v. Consolidated Gas Company of New York No 396 City of New York v. Consolidated Gas Company of New York No 397 William Jackson v. Consolidated Gas Company of New York No 398

• Citation: 53 L.Ed. 382,29 S.Ct. 192,212 U.S. 19
• Decision Date: 04 January 1909
• Docket Number: 397,398,Nos. 396,s. 396
• Parties: WILLIAM R. WILLCOX et al., Constituting the Public Service Commission, etc., of New York, Appts., v. CONSOLIDATED GAS COMPANY OF NEW YORK. NO 396. CITY OF NEW YORK, Appt., v. CONSOLIDATED GAS COMPANY OF NEW YORK. NO 397. WILLIAM S. JACKSON, as Attorney General of the State of New York, Appt., v. CONSOLIDATED GAS COMPANY OF NEW YORK. NO 398
• Court: U.S. Supreme Court

212 U.S. 19

29 S.Ct. 192

53 L.Ed. 382

WILLIAM R. WILLCOX et al., Constituting the Public Service Commission, etc., of New York, Appts.,

v CONSOLIDATED GAS COMPANY OF NEW YORK.

NO 396.

CITY OF NEW YORK, Appt.,

v. CONSOLIDATED GAS COMPANY OF NEW YORK.

NO 397.

WILLIAM S. JACKSON, as Attorney General of the State

of New York, Appt.,

v. CONSOLIDATED GAS COMPANY OF NEW YORK.

NO 398.

Nos. 396, 397, 398.

Argued November 4, 5, 6, 1908.

Decided January 4, 1909.

[Syllabus from pages 19-23 intentionally omitted] The appellee, complainant below, filed its bill May 1, 1906, in the United States circuit Court for the southern district of New York, against the city of New York, the attorney general of the state, the district attorney of New York county, and the gas commission of the state, to enjoin the enforcement of certain acts of the legislature of the state, as well as of an order made by the gas commission, February 23, 1906, to take effect May 1, 1906, relative to rates for gas in New York city.

Since the commencement of the suit, the gas commission has been abolished and the public service commission has been created by the legislature in its stead. The official term of Attorney General Meyer has also expired, and Attorney General Jackson, his successor, has been substituted in his place.

The ground for the relief asked for in the bill was the alleged unconstitutionality of the acts and the order, because the rates fixed were so low as to be confiscatory. Upon filing the bill a preliminary injunction was granted (146 Fed. 150), and, after issue was joined, the case was referred to one of the standing masters of the court to take testimony, in conformity to the practice indicated in Chicago, M. & St. P. R. Co. v. Tompkins, 176 U. S. 167, 179, 44 L. ed. 417, 422, 20 Sup. Ct. Rep. 336.

A hearing was had before the master, who reported in favor of the complainant. The case then came before the circuit court, and, after argument, a final decree was entered, restraining defendants from enforcing the provisions of the acts and the order relating to rates or penalties. 157 Fed. 849. These various defendants, except the district attorney, have taken separate appeals directly to this court from the decree so entered. The acts which are declared void as unconstitutional are chapter 736 of the Laws of 1905, which limits the price of gas sold to the city of New York to a sum not to exceed 75 cents per thousand cubic feet. The act also requires that the gas sold shall have a specified illuminating power, and a certain pressure at all distances from the place of manufacture. Penalties are attached to a violation of the act. The other act is chapter 125 of the Laws of 1906, limiting the prices of gas in the boroughs of Manhattan and the Bronx, to other consumers than the city of New York, to 80 cents per thousand cubic feet, with like penalties as in the act of 1905, and with the same provisions as to illuminating power and the pressure in the service mains. The order which was declared invalid was one made by the gas commission created under and by virtue of chapter 737 of the Laws of 1905, the order providing that the price of gas in the city should be not more than 80 cents to consumers other than the city of New York. The order had the same provisions as to illuminating power and pressure as the acts above mentioned. The master and the court below found that the 80-cent rate was so low as to amount to confiscation, and hence the acts and the order were invalid as in violation of the Federal Constitution.

Messrs. Edward B. Whitney and George S. Coleman for the Public Service Commission.

[Argument of Counsel from pages 25-28 intentionally omitted] Messrs. Alton B. Parker, William P. Burr, and Francis K. Pendleton for the city of New York.

[Argument of Counsel from pages 29-31 intentionally omitted] Mr. William S. Jackson in propria persona for the Attorney General.

[Argument of Counsel from pages 31-33 intentionally omitted] Messrs. James M. Beck, John A. Garver, Charles F. Mathewson, and Shearman & Sterling for the Consolidated Gas Company.

[Argument of Counsel from pages 33-39 intentionally omitted]

Page 39

Messrs. W. Bourke Cochran and Nathan Mattews as amici curice.

Statement by Mr. Justice Peckham:

Mr. Justice Peckham, after making the foregoing statement, delivered the opinion of the court:

At the outset it seems to us proper to notice the views regarding the action of the court below, which have been stated

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by counsel for the appellants, the public service commission, in their brief in this court. They assume to criticize that court for taking jurisdiction of this case, as precipitate, as if it were a question of discretion or comity, whether or not that court should have heard the case. On the contrary, there was no discretion or comity about it. When a Federal court is properly appealed to in a case over which it has by law jurisdiction, it is its duty to take such jurisdiction (Cohens v. Virginia, 6 Wheat. 264, 404, 5 L. ed. 257, 291), and, in taking it, that court cannot be truthfully spoken of as precipitate in its conduct. That the case may be one of local interest only is entirely immaterial, so long as the parties are citizens of different states or a question is involved which, by law, brings the case within the jurisdiction of a Federal court. The right of a party plaintiff to choose a Federal court where there is a choice cannot be properly denied. Re Metropolitan R. Receivership, 208 U. S. 90-110, 52 L. ed. 403-412, 28 Sup. Ct. Rep. 219; Prentis v. Atlantic Coast Line R. Co. 211 U. S. 210, ante, 67, 29 Sup. Ct. Rep. 67. In the latter case it was said that a plaintiff could not be forbidden to try the facts upon which his right to relief is based before a court of his own choice, if otherwise competent. It is true an application for an injunction was denied in that case because the plaintiff should, in our opinion, have taken the appeal allowed him by the law of Virginia while the rate of fare in litigation was still at the legislative stage, so as to make it absolutely certain that the officials of the state would try to establish and enforce an unconstitutional rule.

The case before us is not like that. It involves the constitutionality, with reference to the Federal Constitution, of two acts of the legislature of New York, and it is one over which the circuit court undoubtedly had jurisdiction under the act of Congress, and its action in taking and hearing the case cannot be the subject of proper criticism.

An examination of the record herein, with reference to the questions involved in the merits, shows that the act under which the gas commission was appointed was, subsequently to the commencement and trial of this suit, declared, on grounds

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not here material, to be unconstitutional by the court of appeals of New York. Saratoga Springs v. Saratoga Gas, Electric Light, & P. Co. 191 N. Y. 123, 83 N. E. 693, February 18, 1908. The order made by the commission must therefore be regarded as invalid. It is not important in this case, because the act of the legislature of 1906 makes the same provision as to the price of gas to consumers other than the city that the order does. We have, as remaining to be considered, the above mentioned two acts of the legislature.

The question arising is as to the validity of the acts limiting the rates for gas to the prices therein stated. The rule by which to determine the question is pretty well established in this court. The rates must be plainly unreasonable to the extent that their enforcement would be equivalent to the taking of property for public use without such compensation as, under the circumstances, it just both to the owner and the public. There must be a fair return upon the reasonable value of the property at the time it is being used for the public. San Diego Land & Town Co. v. National City, 174 U. S. 739, 757, 43 L. ed. 1154, 1161, 19 Sup. Ct. Rep. 804; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 442, 47 L. ed. 892, 894, 23 Sup. Ct. Rep. 571.

Many of the cases are cited in Knoxville v. Knoxville Water Co. just decided. [212 U. S. 1, 53 L. ed. ——, 29 Sup. Ct. Rep. 148.] The case must be a clear one before the courts ought to be asked to interfere with state legislation upon the subject of rates, especially before there has been any actual experience of the practical result of such rates. In this case the rates have not been enforced as yet, because the bill herein was filed, and an injunction obtained restraining their enforcement, before they came into actual operation.

In order to determine the rate of return upon the reasonable value of the property at the time it is being used for the public, it, of course, becomes necessary to ascertain what that value is. A very great amount of evidence was taken before the master upon that subject, which is included in five large volumes of the record. Valuations by expert witnesses were given as to the value of the real estate owned by the complainant, and as to the value of the mains, service pipes, plants, meters, and miscellaneous personal property.

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The value of real estate and plant is, to a considerable extent, matter of opinion; and the same may be said of personal estate when not based upon the actual cost of material and construction. Deterioration of the value of the plant, mains, and pipes is also, to some extent, based upon opinion. All these matters make questions of value somewhat uncertain; while added to this is an alleged prospective loss of income from a reduced rate, a matter also of much uncertainty, depending upon the extent of the reduction and the probable increased consumption,—and we have a problem as to the character of a rate which is difficult to answer without a practical test from actual operation of the rate. Of course, there may be cases where the rate is so low, upon any reasonable basis of valuation, that there can be no just...