Page images
PDF
EPUB

Opinion of the Court-Sullivan, J.

question, see Reynolds v. Board of County Commrs., 6 Ida. 787, 59 Pac. 720; Barton v. Schmershall, 21 Ida. 562, 122 Pac. 385.

It is too late to question the power of the legislature to regulate public utilities respecting rates, service, etc. That power presupposes an intelligent regulation and necessarily carries with it the power to employ the means necessary and proper for such intelligent regulation. It would be almost impossible for the legislature of this state to undertake intelligent regulation of utility corporations by the legislature itself. Under the constitution there is a regular session of the legislature every two years, and such sessions are usually sixty days in length. It would not be possible for the legislature in the length of time it sits to regulate intelligently the rates, service and other matters which need regulation in connection, with utility corporations. The necessity of regulating such corporations and the inability of the legislature to administer such regulation is at least a strong argument in favor of the delegation of that power to a commission under laws established by the legislature. The delegation of power to a commission to fix rates and service clearly contemplates reasonable rates and service. That is the standard by which service and rates must be fixed. The common law prescribes the same standard, and in the absence of the provisions of sec. 12 of the public utility law, the delegation of the power to the commission to fix rates and determine service would necessarily be limited by that standard. It was suggested by counsel for plaintiffs on oral argument that where the legislature fixed only a standard of "reasonableness," it was not fixing such a standard as would entitle the commission to exercise its delegated power. That question has been thoroughly considered by the New York court of appeals in the case of the Trustees of Village of Saratoga Springs v. Saratoga Gas E. L. & P. Co., 191 N. Y. 123, 83 N. E. 693, 18 L. R. A., N. S., 713, 14 Ann. Cas. 606. In that case the court held a contrary view to that expressed by counsel, and, among other things, said:

Opinion of the Court-Sullivan, J.

"But it is said that, granting this, 'reasonable' is really no standard, but a mere generality. Again we are of a different opinion. Indeed, if the statute assumed to fix any other standard for rates than that they should be reasonable, I think it would be much more open to attack than its present form. A lawmaker may exhaust reflection and ingenuity in the attempt to settle on the elements which affect the reasonableness of a rate, only to find that in a particular case he had omitted the factor which controlled the disposition of that case."

There is still another consideration which leads inevitably to the conclusion that while the power of establishing uniform rates is legislative, the exercise of the power, a standard having been prescribed, is administrative purely. Practically every state in the Union has a constitutional inhibition against special legislation in the nature of rate-making. No one would contend that the legislature had the power to say that passenger rates on a certain railroad should be three cents a mile and on another five cents a mile, but the legislature would have the power to say that all railroad fares should be "reasonble," and after having so enacted to declare what was reasonable in one case and what in another, when acting upon proper information. However, (if the legislature declares that all rates must be reasonable by a general law, that declaration is purely legislative and cannot be delegated, but the authority to determine what is reasonable is purely administrative and can be delegated, and was delegated in our public utilities act to the commission. As touching upon this question, see Atlantic Coast Line Ry. Co. v. North Carolina Corporation Commission, 206 U. S. 1, 27 Sup. Ct. 585, 51 L. ed. 933, 11 Ann. Cas. 398; Railroad Commission of Alabama v. Central of Georgia Ry. Co., 170 Fed. 225, 95 C. C. A. 117; Public Service Commission v. Northern Central Ry. Co. (Md.), 90 Atl. 105. If the public utilities commission may prescribe rates and regulate service and issue certificates of convenience and necessity, which rates and service must conform to the standard of "reasonableness," the commission must act intelligently and upon evidence, and must consider many facts, and

Opinion of the Court-Sullivan, J.

must determine those questions in fairness to the public as well as to the public utility, and if after fixing rates and regulating service, another utility may come in and compete for the business, the regulation of the commission would amount to nothing.

(Sec. 63a of said act provides that the action of the com

mission may be reviewed in the supreme court on a writ of certiorari or review, and that "No new or additional evidence may be introduced in the supreme court, but the cause shall be heard on the record of the commission as certified by it. The review shall not be extended further than to determine whether the commission has regularly pursued its authority, including a determination of whether the order or decision under review violates any right of the petitioner under the constitution of the United States or of the state of Idaho and whether the evidence is sufficient to sustain the findings and conclusions of the commission. The findings and conclusions of the commission on questions of fact shall be regarded as prima facie just, reasonable and correct; such questions of fact shall include ultimate facts and the findings and conclusions of the commission on reasonableness and discrimination." This court is there given substantially the same authority in reviewing such orders as on appeal. It has the same record before it that the commission had and may determine whether the evidence is sufficient to sustain the findings and conclusions of the commission, and in so doing must weigh the evidence. It may decide whether the orders. of the board are unlawful or whether they violate a right of the petitioner under the constitution of the United States or the state of Idaho, and whether the evidence is sufficient to sustain the findings and conclusions of the commission. It will thus be seen that this court is given ample power to review the orders of the commission and to correct any mistakes that may have been made.)

It is next contended by counsel for the plaintiffs that its franchise rights under said ordinances had, prior to the time the utilities law went into effect, become contract rights within

Opinion of the Court-Sullivan, J.

the protection of the contract clause of the constitution of the United States and cannot be affected by the utilities act.

The question then is directly presented whether the state of Idaho grants to its towns and cities power to make contracts in the form of franchises which cannot be reached or affected even by the state under its police power. The contract right given to a public utility corporation by an ordinance of the city does not come within the contract clause of the constitution of the United States. In the case of Kentucky & Indiana Bridge Co. v. Louisville & N. R. Co., 34 Am. & Eng. R. R. Cases, O. S., 630, the court said:

"If the legislature had no power to alter its police laws when contracts would be affected, then the most important and valuable reforms might be precluded by the simple device of entering into contracts for the purpose. No doctrine to that effect would be even plausible, much less sound and tenable."

It is stated in Jones on Telegraph & Telephone Companies, sec. 214, as follows:

"No government can advance in civilization, in wealth, and in influence without an enforcement of these [police] powers. When any corporation acquires a franchise for the purpose of carrying on a corporate business within a state, it is accepted subject to the police power. By giving the franchise [we may say, permitting it to be exercised] the state. did not abrogate its power over the public highways; nor in any way curtail its power to be exercised for the general welfare of the people."

It is well settled by the decisions that the making of contracts between individuals or between individuals and corporations or municipalities and corporations, as in the case at bar, can never be held to abrogate or prevent the exercise by the state of its police power in any manner that it may consider just and proper. If it were conceded that such contracts could be entered into, every substantial power granted. to the commission by the legislature in the public utilities act could easily have been nullified and set at naught by the simple act of making contracts prior to the time the act

Idaho, Vol. 26-17

Opinion of the Court-Sullivan, J.

became effective, as was, in fact, done in this case, the act having been approved by the governor on March 13th and gone into effect on May 8th, and the franchise contracts referred to passed on the 29th of April and the 5th of May, respectively, just prior to the time the act went into effect. Any future exercise by the state of its police power cannot thus be thwarted and prevented by the mere procuring by a utility corporation of the passage of an ordinance by a city or town granting it certain rights. Such contracts must be held not to be protected by any provision of the state or federal constitution against the proper exercise by the state of its police power. Said act became a law when approved by the governor, but did not go into effect until May 8th, there being sixty days between the adjournment of the session when said act was passed and its going into effect. And it was not intended that a public utility corporation should thwart the purpose of said act simply by procuring the passage of an ordinance granting it certain rights that could not be granted after the law went into effect.

It is provided in sec. 48a that no electrical corporation, etc., shall "henceforth" begin the construction of an electrical plant, etc. It was not intended that a public utility corporation should slip in between the passage and approval of said act and its going into effect and procure rights that would deprive the state of the right to regulate it in its operations and in making it amenable to the police regulation of the state, especially where it had not begun "actual construetion work and is prosecuting such work in good faith and uninterruptedly and with reasonable diligence in proportion to the magnitude of the undertaking," as provided by sec. 48b of said act. Under the facts of this case it clearly appears that the plaintiff had not begun actual construction work on its systems within either of said cities.

It is next contended by counsel for plaintiff that the provisions of sec. 18, art. 11, of the constitution, prohibit the legislature from passing a law that would create a monopoly ; that the provisions of said section prohibit combinations to regulate either production or prices of commodities used by

« PreviousContinue »