City Commission v. Bismarck Water Supply Co.

181 N.W. 596 | N.D. | 1921

Lead Opinion

Christianson, Ch. J.

This is an application for an original writ to have reviewed and set aside and annulled as unlawful and in excess of jurisdiction a certain order made by the board of railroad commissioners of this state on or about October 2, 1920, whereby the said board of railroad commissioners granted an increase in rates to the Bismarck Water Supply Company. The petition alleges that the city of Bismarck is a municipal corporation having a population of about 7,000; that on June 28, 1919, tlie city commission, by resolution duly adopted, made the following complaints against the service rendered by the Bismarck Water Supply Company:

“(1) Unsanitary condition of reservoirs.

“(2) Unprotected condition of reservoirs.

“(8) Insufficient fire and water protection, in this that there is only one water pump which may at any time break down and repairs arc difficult to procure, thus endangering the property, health, and lives of the citizens of Bismarck.

“(4) Plant is insufficient to take care of supply and demands of service.

“(5) There is an unnecessary delay in extending water mains after demand is made therefor.

“(6) There is no filtration plant.

“(7) The mixing chamber is not in fit condition to insure a proper mixture of the chlorine used to purify the water.

“(8) The rates are excessive for home consumption, lawns and gardens.

“(9) The water is muddy and full of sediment.”

That such resolution was filed with the board of railroad commissioners; that thereafter the Bismarck Water Supply'Company filed an answer to the effect that it denied generally and specifically each and every charge so made by the city commission against the Bismarck Water-Supply Company; that the issues thus framed were the only ones before the board of railroad commissioners to determine; that after hearing and taking of evidence the board of railroad commissioners on c»r about October 2, 1920, “wrongfully and unlawfully and in excess of their jurisdiction and foreign to the issues created at said hearing,” did make and file an order wherein it granted the Bismarck Water Supply Company permission to increase its rates in amounts, aggregating approximately GO per cent increases in existing rates. (The order also contained other provisions relating to the matter mentioned in the chai’ges filed by the city commissioners) ; that subsequently the city commissioners appealed to the district court from the entire order and determination of the railroad commissioners; that a determination of such questions will require a considerable length of time and that in the meantime the unlawful rates and increases purported to be authorized by the'board of railroad commissioners will be put into effect; that there are approximately 1,400 users of waters, including the municipality and the state; that the relators are resident taxpayers of the city of Bismarck, and users of water furnished by the Bismarck Water Supply Company.

■ It is further averred in said petition that the board of railroad commissioners did not at any time during the progress of said hearing initiate or conduct any examination relating to the increase of rates; and that no notice of said proposed increase in rates was given as required by chapter 192, Laws 1919, or at all. It is further averred that the law under which the board of railroad commissioners purported to act is unconstitutional and void; and that the said hoard of railroad commissioners has no legal authority or power whatever to exercise any control over, or to act upon or grant rate increases to, any utilities except railroad and street ear companies.

It is further averred in the petition, “that said board of railroad commissioners is proceeding to act under the said chapter 192, Laws of 1919, and is prescribing rates for and making orders with reference to public utilities doing business in every community of the state of North Dakota. That it is constantly and continuously making orders of the character herein described under circumstances and conditions similar to those existing in the proceeding instituted as hereinbefore alleged for the purpose of securing a reduction of rates charged by the Bismarck Water Supply Company and requiring certain other acts and things to be done. That in its said proceedings every municipality, community, and citizen of the state is interested and affected, and that by reason of the premises the acts of the commissioners under said chapter 192 affect the rates and privileges and franchises of this state. . . . That the matters herein involved are of great public interest and of public concern and involve questions affecting the sovereign rights of the state and of said boards and officers and the operation of said state statute, and are not local in character but will affect each and every municipality and community in the state of North Dakota and the rights of all the citizens of such municipalities and communities with reference to their rights as against the action of public utilities, and of the state board of railroad commissioners pretending to exercise power to increase rates thereof. That the state of North Dakota is a'user of such water in its state institutions at Bismarck.”

The respondent, Bismarck Water Supply Company, appeared specially, and so appearing, moved the court:

“(1) To dismiss the alternative writ issued in this cause and all proceedings herein and to vacate the restraining orders issued herein, on the ground that this court has no jurisdiction to entertain the petition, and on the further ground that this proceeding is not within the original jurisdiction of this court.

“(2) To dismiss all proceedings herein and to vacate the restraining orders issued in this cause as to the respondent, Bismarck Water Supply Company on the grounds that the controversy between the city of Bismarck and the Bismarck Water Supply Company was, at the time of the issuance of the order by this court, duly pending in the district court of Burleigh county upon an appeal taken by the city from the determination of the board of railroad commissioners; and that said Water Supply Company (which is a corporation organized under the laws of the state of West Virginia) had, prior to the filing of the petition in this court, requested that said cause be removed to the United States district court for the district of North Dakota, and submitted to, and filed for approval by, the district court a removal bond in due form.”

The only question necessary to consider in connection with this motion is the first one raised. If this action is one within the original jurisdiction of the court, then it is an action by the state, and not an action by the individuals who appear as relators. The original jurisdiction is “reserved for the use of the state itself when it appears to be necessary to vindicate or protect its prerogatives or franchises, or the liberties of its people; the state uses it to punish or prevent wrongs to itself or to the whole people; the state is always the plaintiff and ■the only-plaintiff, whether the action be brought by the attorney general,,, ,or, against his consent, on the relation of a private individual under the permission and direction of the court. It is never the private relator’s suit; he is a mere incident; he brings the public injury to the attention of the court, and the court, by virtue of the power granted by the Constitution, commands that the suit be brought by and for the state. The private relator may have a private interest which may be extinguished (if it be severable from the public interest), yet still the state’s action proceeds to vindicate the public right.” State ex rel. Linde v. Taylor, 33 N. D. 76, 84, L.R.A.1918B, 156, 156 N. W. 561, Ann. Cas. 1918A, 583; State ex rel. Bolens v. Frear, 148 Wis. 456, 500, L.R.A.1915B, 569, 134 N. W. 673, 135 N. W. 164, Ann. Cas. 1913A, 1147.

A suit by a state in one of its own courts cannot be removed to a Bcderal court, unless it is a suit arising under the Constitution or laws of the United States or treaties made under their authority. Germania Ins. Co. v. Wisconsin, 119 U. S. 473, 30 L. ed. 461, 7 Sup. Ct. Rep. 260. And “a suit cannot be said to be one arising under the Constitution or laws of the United States until it has in some way been made to appear on the face of the record that ‘some title, right, privilege, or immunity, on which the recovery depends, will be defeated by one construction of the Constitution or a law of the United States, or sustained by an opposite construction.’ ” Ibid. The record in this ease discloses that it does not arise under the Constitution or laws of the United States, or any treaty made under their authority. It arises under, and involves only a construction of, the constitution and laws of this state. So clearly the cause which it is sought to present to this court is not removable, provided it is one within the original jurisdiction of this court. Whether the controversy pending in the district court of Burleigh county between the city of Bismarck and the Bismarck Water Company is removable is not before us, and upon this question we express no opinion.

In connection with the objection to jurisdiction, it was elso urged that under the provisions of the Public Utilities Act (Laws 1919, chap. 192), an appeal may be (and has been) taken from the determination of the board of railway commissioners, and that hence this court should in no event assume jurisdiction and determine the controversy attempted to be brought before it.

The question as to what causes are within the original jurisdiction of this court has been considered in many eases. No good purpose would be served by reviewing these cases here,- and it would unduly lengthen this opinion to do so. The function and scope of the original jurisdiction was considered by this court quite fully, in State ex rel. Lofthus v. Langer, 46 N. D. 462, 177 N. W. 408. See also State ex rel. Lemke v. Chicago & N. W. R. Co. 46 N. D. 313, 179 N. W. 383. The writer did not believe that this case was one within the original jurisdiction-. Neither’did he believe that the controversy so presented was one within either the appellate or supervisory jurisdiction. In other words, the writer was of the opinion that in any view of the case it was, in the first instance, one for the determination of the district court. The writer, therefore, believed that the proceeding should be dismissed. These views, however, were not shared by a majority of the court. They were of the opinion that the cause presented is one within the original jurisdiction; and that this court ought to assume jurisdiction of the controversy as presented by the petition, and determine the validity of the order granting the increase in rates. Accordingly, the motion to dismiss the proceeding was denied and this case was set down for a hearing on the merits. Thereafter, the respondents, the Board of Railroad Commissioners and the Bismarck Water Supply Company, filed separate returns. The return of the Board of Railroad Commissioners is to the effect that the entire record in the matter in which the order complained of was made had been certified to the district court of Burleigh county. In the return, it is denied that the board has, in this case or any other case of similar nature, raised, lowered, or fixed rates for public utilities, or that it contemplates doing so in the future, without giving duo notice of such intention as provided by chapter 192, Laws 1919, and after hearing therein. It is further averred that the decision of the board of railroad commissioners was' made at a meeting of the board where all the members were present and that two of the members signed the order complained of, while the third member dissented therefrom.

In the return of the Water Supply Company, the jurisdictional questions, raised in the motion to dismiss, are again urged. It is admitted that the relators are taxpayers in the city of Bismarck and users of water therein. It is further admitted that the proceeding before the board of railroad commissioners was instituted upon the resolution set forth above and that the Water Supply Company filed the written answer hereinabove set forth. It is further averred that the board of railroad commissioners had full authority and power to ascertain the reasonableness of rates in said proceedings and to make the order which it did.

TJpon the oral argument, the attorneys for the Bismarck Water Supply Company again pressed the jurisdictional objections; namely, that this is not a cause properly within the original jurisdiction of this court; that a remedy by appeal is provided, in tbe Public Utility Act; that review of tbe order can be had in that manner only; and that tbe writ prayed for does not entitle this court to review tbe validity of tbe increase in rates. These objections were all presented upon tbe argument on tbe motion to dismiss. There has been no change in the views of tbe different members of tbe court upon this question since tbe motion to dismiss was determined.' Tbe writer adheres to tbe views be then entertained and expressed. A majority of tbe court are' of tbe opinion that this court has jurisdiction of tbe controversy and may and ought to determine tbe validity of tbe order increasing tbe rates.

This brings us to the merits of tbe controversy — whether tbe order made by tbe railroad commissioners purporting to increase rates of tbe Bismarck Water Supply Company was and is void as to persons affected thereby and not parties to the proceeding before tbe railroad commissioners.

It is conceded that tbe board of railroad commissioners has no power to regulate, control, or fix rates of tbe Water Company, except as such power is given by statute, for the Constitution does not profess to give tbe railroad commissioners any powers except such as “shall be prescribed by law.” N. D. Const. § 83. Whatever power the board of railroad commissioners have to fix or change tbe rates of a public utility like the Water Supply Company is conferred by chapter 193, Laws 1919.

Sections 4 and 14 of tbe Act, provide: “Tbe commissioners shall have tbe power, after notice and hearing, to enforce, originate, establish, modify or adjust and promulgate tariffs, rates, joint rates, tolls and charges of all public utility corporations and whenever tbe commissioners shall, after bearing, find any existing rates, tolls, tariffs, joint rates or schedules unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of any of tbe provisions of this act, tbe commissioners shall, by an order, fix reasonable rates, joint rates, tariffs, tolls, charges or schedules to be followed in tbe future in lieu of those found to be unjust, unreasonable, insufficient or unjustly discriminatory or otherwise in violation of any provision of law.” Section 4. “No change shall be made by any public utility in' any tariffs, rates, joint rates, fares, tolls, schedules or classifications, or service in force at the time this act takes effect, except after thirty days’ notice to the commissioners, which notice shall plainly state the changes proposed, and, upon a showing before the commissioners and a finding by the commissioners that such increase is justified.” Section If.

The proceeding before the railroad commissioners was instituted under § 30 of the act which reads: “Complaint may be made by the commissioners of its own motion or by any corporation or person, chamber of commerce, board of trade, or any civic, commercial, mercantile, traffic, agricultural or manufacturing association or organization, or any body politic or municipal corporation, by petition or complaint in writing, setting forth any fact or thing done or omitted to be done by any public utility, including any rule, regulation or charge heretofore established or fixed by or for any pxiblic utility, in violation or claimed to be in violation of any provisions of law or of any order or rule of the commissioners. The commissioners shall fix the time when and place where a hearing will be had upon the complaint and shall serve notice thereof upon the complainant and the utility affected thereby not less than, ten days before the time set for such hearing, unless the commissioners shall, find that public necessity requires that such hearing be held at an earlier date, provided, that no complaint shall be entertained by the commissioners, except on its [their] own motion, as to the reasonableness of any rates or charges, of any heat, gas, electrical, water or telephone utility, unless the same be signed by the mayor, council, commission or other legislative body of the county, city, town or village, if any, within which .the alleged violation occurred, or not less than fifteen consumers or purchasers or prospective consumers or purchasers of such heat, gas, electrical, water or telephone service.”

The following section (31) provides: “At the time fixed for a. hearing before the commissioners or a commissioner, or the time to which the same may have been continued, the complainant, and the utility or person complained of, and such corporations or persons as the commissioners may allow to intervene, shall be entitled to be heard and to introduce evidence.”

The Public Utilities Act is replete with the requirement of notice and hearing. It recognized the right of interested parties to intervene in hearings as to the reasonableness of rates instituted upon the complaint of city officials. The proceeding before the railroad commissioners under consideration here was instituted upon a written complaint filed by the officers of the city of Bismarck. The Water Supply Company denied the charges contained in the complaint. It asked for no affirmative relief. The issues before the board of railroad commissioners were those framed by the complaint and the answer. It is true the railroad commissioners might have instituted a proceeding on their own motion, but this they did not do. They did not intimate to the parties that they would attempt to adjudge except upon the issues presented to them. They purported to sit 'in judgment upon the proceeding which the contending parties presented. There was no demand for an increase in rates by the Water Supply Company. There was no reason why any party interested in water rates in the city of Bismarck should anticipate that the hearing before the railroad commissioners could or would result in an increase in rates. Certainly counsel for the Water Company had no idea that the hearing before the railroad commissioners might result in such increase. Bor in their brief, submitted to the railroad commission at the conclusion of the hearing (which brief has been certified to this court as a part of the record), they said: “Section 4 of the act in question gives the commission authority after hearing, if they find any existing rates or schedules to be unjust, unreasonable, insufficient, or unjustly discriminatory, to fix reasonable rates to be followed in the future. And if upon any hearing a public utility is asking to have its rates raised, above the maximum contained in its charter, such public utility shall furnish to the-commission certain things enumerated in § 4. That part of the section can hare no application to the instant case because the respondent in this case at this hearing is not ashing to have its rates raised

As we construe the Public Utilities Act, rate increases cannot be ordered except after notice and hearing. And as we read the record certified to us there was neither notice nor hearing of a proceeding for an increase in rates here. Hence, the order granting such increase is void. See Beale & W. Railroad Rate Regulation, § 1143. See also Railroad Comrs. v. Oregon R. & Nav. Co. 17 Or. 65, 11 Am. St. Rep. 778, 19 Pac. 702.

On the oral argument it was contended that the railroad commissioners are authorized to make investigation for themselves and to obtain the necessary information to enable them to act in those matters wherein the Public Utilities Act gives them power to act. The record here does not show that the railroad commissioners initiated any proceeding on their own motion. They purported to be hearing a definite controversy which was being submitted to them. Nor do we believe that the act empowers the railroad commissioners to make findings and orders upon specific investigations without affording interested parties notice and hearing. On the contrary we believe that the act clearly contemplates that notice and hearing shall be afforded in all cases where it is sought to change existing rates. If construed otherwise, the statute would be of doubtful validity. United States v. Baltimore & O. S. W. R. Co. 226 U. S. 14, 20, 57 L. ed. 104, 107, 33 Sup. Ct. Rep. 5; Washington ex rel. Oregon R. & Nav. Co. v. Fairchild, 224 U. S. 510, 525, 56 L. ed. 863, 868, 32 Sup. Ct. Rep. 535; Beale & W. Railroad Rate Regulation, § 1143.

It was also suggested on the oral argument that the railroad commissioners had authority to order an increase in rates if they found that to be necessary to enable the Water Supply Company to do some of the things which the city commissioners had asked that it be required to do. We do not believe this argument is sound. When in the determination of a matter submitted to a court it becomes apparent that, to make a full determination, other issues or parties are necessary, the court does not proceed to decide those matters in the. absence of issues and parties, but requires issues to be formed and the proper parties to be brought in. While the board of railroad commissioners is an administrative body, it exercises quasi-judicial powers, and is subject to the requirement of due notice. If the board of railroad commissioners deemed it desirable, of their own motion, to take up and determine whether the rates of the Water Supply Company ought to be raised, it should have given notice and afforded hearing thereon before making a determination.

We express no opinion upon the questions actually involved in the proceeding initiated before the board of railroad commissioners upon the complaint of the city of Bismarck. That controversy is now pending in the district court of Burleigh county. But, for reasons already given, we are of the opinion that the question of an increase in rates was not involved in the proceeding before tbe commissioners. ' No hearing bas in fact been bad before tbe railroad commissioners on that question; and in our judgment the order purporting to grant an increase in rates is null and void. And tbe writ of this court will issue restraining tbe respondents from enforcing the same.

Robinson, Bronson, and Grace, JJ., concur.

---

Concurrence Opinion

Robinson, J.

(concurring specially). This is an original application to review and cancel an order of tbe railroad commissioners adding 60 per cent to the water rates of tbe city of Bismarck.

Objection is made to tbe original jurisdiction of tbe court on tbe ground that tbe case does not present a matter of public concern, and on tbe ground that an attempt bas been made to remove tbe matter to the Federal courts. But tbe case does not present a question arising under tbe Constitution or laws of the United States. It is not removable. The case does present a question of public concern, because tbe ■ jurisdiction assumed by tbe railroad commissioners extends not merely to tbe city of Bismarck, but to all other cities of tbe state and affects tbe public welfare. This court does not assume original jurisdiction or issue original writs as a matter of course. Before issuing an original writ and making an order for a stay of proceedings, the court does well consider and decide on the propriety of taking jurisdiction, and its decision is final.

The case presents only two questions: (1) Have the railroad commissioners any supervision over the affairs of cities or any right to decide on matters which do not pertain to railroads? (2) If the railroad commissioners have any jurisdiction to fix the water rates of a public utility above the maximum rates of its charter, did they have it in this particular case ? There is no claim that the commission has any such power except under the Public Utility Act (Laws 1919, chap. 191). Section 4 provides: The commissioners shall have power, after notice and a hearing, to enforce, originate, establish, modify or adjust and promulgate tariff’s, rates, tolls and charges of all public utility corporations. Also, that when any public utility corporation shall ask to have the rates raised above the maximum rates of its charter, -it shall furnish the commission with-data as follows: (1) The original cost of all its property; (2) the date of the acquisition of such property; (3) the amount of any money invested in the property; (4) the amount of stock outstanding; (5) blue prints showing the location and position of all mains, poles, lines, wires and all other property belonging to the company, and such like.

Now on the record there can be no just claim of any compliance or attempt to comply with § 4 of the act. The public utility company did not file with the commission any petition for an increase of rates. The commission did not give any notice of an application and a hearing for an increase of rates. The city did make application to the commission for an order to compel the utility company to render better service and did allege that in many respects the service rendered was defective, the water muddy and unfit for use. And after hearing on that petition, and on that only, the commission made the order in question. There was no petition for an increase in rates, no hearing or notice or any attempt to give notice in regard to the. same. Hence, the order made by the commissioners is contrary to the first principles of law and it is void.

The further question is: Have railroad commissioners any supervision over the affairs of cities and a right to fix the water rates of a public utility above maximum rates of its charter ? The railroad commissioners are constitutional officers and it is hard, to say on what principle they can be made beasts of burden. If the legislature may impose on them the duty of fixing rates and charges for public utilities, why not the duty of working six hours a day on the highways? We all know that if the commission do their duty they must, during the business hours of every day, give all their time to the consideration of railroad matters. Wo know that if the commissioners run around the country and give a large portion of their time — as they have been doing — • to hearings in regard to rates, charges, and the conduct of public utility corporations they must neglect their duties as railroad commissioners. We know that a city is competent to contract with public utility companies in regard to rates that may be charged for services and when, as in this ease, a city gives to a utility company a charter authorizing it to use the streets of the city and to put down and construct water mains on condition that it shall furnish water at a sum not to exceed a prescribed maximum rate, and that charter is accepted, it constitutes a contract between the city and the company, and the contract is protected against impairment by the Constitution of the United States. The legislature may not pass any law impairing the obligation of contracts and, of course, it may not authorize a commission to do what it is prohibited from doing.

Pursuant to § 130 of the Constitution, the legislature has by law provided for the organization of municipal corporations. Each city, by its council or commission, has power to control its own finances and property and has power to make internal improvements and to engage in any industry, enterprise, or business the same as a natural person. A city is a self-governing, corporate entity, and its contracts with public utility companies are not subject to review Or modification by any railroad commission. A contract between a city and a public utility company is protected against impairment just as much as d contract between two natural persons. Hence the order for a 60 per cent ' increase of water rates is void. ' ■ •

Order reversed and cancelled.

---

Concurrence Opinion

Birdzell, J.

(concurring specially). My views on tbe question of tbe original jurisdiction of this court were fully expressed in tbe case of State ex rel. Lofthus v. Langer, 46 N. D. 462, 177 N. W. 408, and they have undergone no change since that case was decided. In my opinion, under tbe showing made in tbe returns in this case, as well as that made upon the argument in support of tbe petition, this cause is not properly one within tbe original jurisdiction of this court. I am, therefore, out of accord with tbe majority opinion in so far as it decides this to be a proper case for tbe assumption of original jurisdiction. However, as in tbe case of State ex rel. Bofthus v. Banger, supra, I deem it my duty to say that, since tbe majority bas decided in favor of tbe original jurisdiction, it is proper for every member of tbe court to express bis views on tbe merits of tbe controversy. On tbe merits I can add nothing to tbe principal opinion. I concur in all that is said therein with reference to the validity of the order of tbe board of railroad commissioners.