261 P. 592 | Kan. | 1927
The opinion of the court was delivered by
In this proceeding two electric power, companies are contending for the right to supply a cement plant at Mildred, a large user of electric current, with the power necessary to the op
The Kansas Gas and Electric Company, hereinafter designated as the electric company, was duly ox-ganized in 1910, and was authorized by the chax'ter board of the state to carry on the business of manufactux’ing, distributing and selling electric current in Kansas. It engaged in business and sold and distributed electric curx-ent to consumer's in a number of counties in the state, but principally in Sedgwick and Butler counties. It appears to have a line to Bluff-ville, Wilson county, which was about forty-eight miles from the cement plant, and it applied for permission to construct a transmission line to Mildred with a view of furnishing electx’ic current to the cement plant, but it had not obtained a certificate of convenience and necessity for the extension or the furnishing of current in that zone. It further appears that the cement plant was x-eady and willing to buy current from either of the power companies which it found was able to supply sufficient cux’rent for the operation of the plant at a reasonable cost. A hearing was had before the commission on January 3, 1925, nominally for authority of the utilities company to build a traxxsmission line to the cement plant, and.at the same time the electric company applied to the commission for permit to build a transmission line from Bluffville to Mildred.
Elaborate pleadings and statements were filed and made and much testimony produced before the commission by the parties, but
“One utility is attempting to enter territory occupied and served by another utility of the same character, and where such competition would have the effect of duplication service to the injury of the users of the commodity furnished, that the public service commission has the jurisdiction and authority to exclude the applicant company.”
Judgment was accordingly given for the defendants.
The question first argued relates to the interpretation and effect of a section of the public utility act, which provides :
“No common carrier or public utility governed by the provisions of this act shall transact business in the state of Kansas until it shall have obtained a certificate from- the public utilities commission that public convenience will be promoted by the transaction of said business and permitting said applicants to transact the business of a common carrier or public utility in this state. This section shall not apply to any common earner or public utility governed by the provisions of this act now transacting business in this state.” (R. S. 66-131.)
It is contended by the plaintiff that the last clause of the section
“The public utilities commission is given full power, authority and jurisdiction' to supervise and control the public utilities and all common carriers, as hereinafter defined, doing business in the state of Kansas, and is empowered to do all things necessary and convenient for the exercise of such power, authority and jurisdiction.” (R. S. 66-101.)
Plaintiff contends that such power has not been vested in the commission by the legislature, and if exercised would be an unconstitutional invasion of its rights. It is argued that the provision relating to certificates of convenience and necessity should not be applicable to utilities “now transacting business in the state,” is an added right to its franchise which cannot be constitutionally taken from it. Counsel says:
“By specially exempting the old companies from the new law all their rights were preserved, and this provision went much further than merely relieving the old companies from applying for a certificate from the new commission. Whatever may be the powers of the commission to create or protect a monopoly under the new section of the law, such powers by express enactment of the legislature do not extend to the old companies nor control their activities and property rights. The commission is given no power of any kind to curb or limit corporate or franchise powers existing at the time the law went into effect. It has been asserted by the state at certain stages of these proceedings that the exemption contained in the section under consideration should be construed to apply only to such parts of the state as were actually occupied by plaintiff at the time of the law's enactment. But we assert that the more reasonable view is that the legislature must have known that franchises and public engagements are commonly accepted in entirety and not by piecemeal and intended to protect such franchises as had been accepted and were then being acted upon in their entirety.”
It was further said that—
“The grant and the acceptance by a chartered company includes what could*695 reasonably have been held in prospect by the company and all that could fairly have induced the incorporators to make their investments and assume the public duties imposed by the franchise, and that such rights whether rising to the dignity of contracts or not will not be forfeited or repealed, except upon a clear and unmistakable declaration of the legislature showing an intent to forfeit or repeal rights and privileges so acquired.”
The regulations in question cannot be considered a part of the charter rights of the plaintiff, but constitute an exercise of the police power which the state retains for the protection of the public safety and welfare. It is too late to insist that utilities organized and chartered under our general .law are not subject to the police power designed for the protection of the public and the utility as well. In Atlantic Coast Line v. Goldsborough, 232 U. S. 548, 558, the court said:
“It is settled that neither the ‘contract’ clause nor the ‘due process’ clause has the effect of overriding the power of the state to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort or general welfare of the community; that this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and that all contract and property rights are held subject to its fair exercise.” (See, also, Union Dry Goods Co. v. Georgia, P. S. Corp., 248 U. S. 372.)
The public utilities act in terms is made to apply to “all companies for the production, transmission, delivery or furnishing of heat, light, water or power.” (R. S. 66-104.) In a case where one telephone company was seeking to enter territory occupied by another and was enjoined from doing so, it was said, among other things:
“The enactment of the public utilities law was an extension of the police power of the state over such utilities, but it did not grant any additional rights to such utilities as were established and maintained before the adoption of that act, and the Baxter Telephone Company procured no rights thereunder which it may maintain against possible competitors. The public utilities law was not enacted as an extension or enlargement of the powers and privileges of an existing telephone company.” (Telephone Co. v. Telephone Association, 94 Kan. 159, 166, 146 Pac. 3214.)
The power contested here has been recognized as existing in a number of our former decisions. In Janicke v. Telephone Co., 96 Kan. 309, 150 Pac. 633, a party had established a telephone system in a city, and another company proposing to enter the city and transact a like business made application to do so, which was denied by the city council. A contract was made between the established company and the invading utility for an exchange of business, with
' “Two telephone systems serving the same constituency place a useless burden upon the community, cause sorrow of heart and vexation of spirit, and are altogether undesirable. The public utilities commission, with its power over rates and sufficiency and efficiency of service, can quickly suppress any evil consequences of monopoly, and good public policy favors rather than discountenances a single system. In this instance the public was distinctly benefited by the arrangement whereby subscribers to each system, each operating in a different field, acquired the free use of the other.” (p. 311.)
In treating of the policy of regulating and limiting the service to a single utility and its effect on the utility and the public, the court said:
“Moreover, in passing under the jurisdiction, of the state commission the defendants are not going to be subjected to some malignant influence. The commission may require some more formality in the conduct of their business, but there are compensations. It will be defendants’ duty to give adequate service at reasonable rates, but in return their business will be protected from wasteful and ruinous duplication and competition. Note the plight of one defendant in this action which has made some effort to obey the law, the Wakeeney company. Its service has been interfered with by a new company, the Trego, for whose benefit the connection between the lines of the Wakeeney company and of the other defendants was severed in January, 1922. If the Wakeeney company and the other defendants were giving efficient and sufficient service, the Trego company should have kept out of the field or developed a field of its own. It had no right to interrupt the public service being performed by the other defendants. It was to prevent such mischievous rivalry that the law made a certificate of convenience to be issued by the commission a prerequisite to engage in a public utility business.” (State, ex rel., v. Telephone Co., 112 Kan. 701, 705, 212 Pac. 902.)
The question was the subject of consideration in Telephone Co. v. Telephone Association, supra, in which it was remarked that—
“We can see no fundamental difference between the telephone business and any other business except that owing to its importance and general use one telephone system is likely to be more satisfactory and less expensive than where two or more such companies occupy the same field. This the legislature has recognized and has provided that as a matter of public policy no public utility like a telephone company, excepting one strictly mutual, will be authorized to do business until it has obtained a certificate or a license of authority as a public convenience ■ and necessity within the community where it*697 seeks to do business. . . . Prior to the passage of the public utilities act any number of telephone companies which would persuade a city government to grant a franchise for the use of the streets and alleys, might establish a telephone system within such city. The competition of these would affect the business and affect the revenues of other utilities of the same character which had previously been established.” (p. 166.)
In view of these decisions it is hardly necessary to refer to outside authorities, but we may refer to Weld v. Gas & Electric Light Commissioners, 197 Mass. 556, wherein it was said:
“In the first place, in reference to this department of public service, we have adopted, in this state, legislative regulation and control as our reliance against the evil effects of monopoly, rather than competitive action between two or more corporations, where such competition will greatly increase the aggregate cost of supplying the needs of the public, and perhaps cause other serious inconveniences. . . . The state, through the regularly constituted authorities, has taken complete control of these corporations so far as is necessary to prevent the abuses of monopoly. Our statutes are founded on the assumption that, to have two or more competing companies running lines of gas pipe and conduits for electric wires through the same street would often greatly increase the necessary cost of furnishing light, as well as cause great inconvenience to the public and to individuals from the unnecessary digging up of the streets from time to time, and the interference with pavements, street railway tracks, water pipes and other structures. (Citing authorities.) In reference to some kinds of public service, and under some conditions, it is thought by many that regulation by the state is better than competition.” (p. 558.)
In Pond on Public Utilities, 3d ed. § 901, the subject of supplanting competition with state regulation was discussed and it was said that—
“The theory of the regulation of municipal public utilities by the state through such a commission is to avoid competition which is now generally recognized as a needless economic waste and an entirely insufficient method of ■securing the necessary regulation and control. Under this method the state through its commission takes the place of competition and furnishes the regulation which competition cannot give, and at the same time avoids the expense ■of duplication in the investment and operation of competing municipal public utilities.”
We think the commission had the power to regulate the service .and define the limits prescribed, that its exercise operates beneficially to the public and is not inimical to the interests of the utilities. Such an order is really advantageous to an invading utility whose application was denied, where the admission of a second utility would be a serious inconvenience to and burden upon the public, and where the
Our conclusion is that the decision of the district court was correct... and its judgment is affirmed.