102 So. 422 | La. | 1924
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *340 In 1902 the town of Vidalia granted to plaintiff a franchise for a ferry across the Mississippi river, to run for 20 years from March, 1906. The rates were fixed on most articles, but not on automobiles which had not then come into general use. It was provided, however, that rates not fixed in the grant should be fixed by agreement, otherwise by arbitration. Some ten years ago the plaintiff fixed rates on automobiles, *341 satisfactorily to himself and acquiesced in (?) by the public (since there was nothing else for the public to do). In February, 1923, the town council attempted to fix compulsory rates on automobiles (leaving the franchise otherwise intact), and plaintiff enjoined on numerous grounds, all of which resolve themselves finally into these four: (1) That the contract was violated, (2) that the town council was not a rate-making body, (3) that the rates were fixed without a hearing, and (4) that they are unreasonable.
The trial judge perpetuated the injunction on the third ground, and defendant appeals.
And as to that we are satisfied that the action of the town council was ultra vires and void. For whether such rates be fixed by contract or otherwise, they are manifestly compulsory so far as they affect the public, who must either pay the rates fixed or go without. And since public utilities are for all practical purposes public necessities, and virtual monopolies, it follows that the rate fixed for such necessities are in effect a tax upon the public for such public service. In *342 this state a ferry is made a monopoly by law. Act 68 of 1896, p. 101.
The fixing of such rates is therefore essentially a legislative function; and being such it cannot be made a matter ofarbitration, since to make it such is simply to delegate to arbitrators the power to fix such rates; and this cannot be done.
"Municipal councils, or other functionaries of government, cannot renounce the powers vested in them by the Constitution and laws. An ordinance of a municipality which makes even a partial surrender of political power is null." Third Municipality v. Ursuline Nuns, 2 La. Ann. 611.
On the other hand, an agreement to agree is no agreement at all, since either party may avoid it by mere failure to agree.
Since the agreement to agree was vain, and the agreement to arbitrate was void, it follows that either plaintiff might charge what he pleased upon automobiles transported over his monopoly, or that the town council had the right to fix the rates; for there was in 1902 no public service commissions authorized to fix ferry rates.
And it would seem that the question whether plaintiff or the town council had the power to fix the rates ought to answeritself, since an unbridled monopoly of a public necessity would be an anomaly under a free, not to say a civilized, government.
From this it follows either that ferries within the control of municipal corporations shall be subject to no control whatever as to *343 the rates which they might charge for ferriage, or that such rates are subject to the control of the municipalities.
But can it be supposed for a moment that the Legislature meant to provide that ferriage tolls should be subject to regulation in the sparsely settled rural communities, but not subject to regulation in populous urban communities; that our solons were straining at gnats and swallowing camels?
Hence it cannot but be that the right to establish a ferry (meaning thereby an exclusive privilege) carries with it necessarily the right to fix the rates.
But if the right to fix the rate exists in the municipality, how is that right to be exercised. The answer may be, "By contract." Granted; but where is the law or the logic, which says that such power to fix rates shall be exercised only by contract? If there be any such, the writer hereof is unable to discover it. For although the power to contract for rates for itself does result from the inherent power of a municipality to make contracts, yet it is perfectly obvious that the right to fix rates for its inhabitants is derived not from the right to make contracts, but from the police power.
And again what is to be done when the contract grants a franchise, but fails to provide (as in this case) for a tariff covering articles known or unknown at the time of the contract? Is the municipality powerless to fix such tariff unless with the consent of the grantee, which is the same thing as to say that the grantee may charge what he pleases? That is precisely what the grantee claims (in effect) in the case at bar. He has established his own tariff; if the town agrees, it is very well; if the town does not agree, it is equally as well, since he goes on collecting such tariff just the same as if the town had agreed. As to the matter of arbitration, we have already disposed of that.
Our conclusion is that ferries under the *344 control of municipalities are subject to regulation by the governing authorities of such municipalities as to all rates and tariffs not established by the franchise itself. Whether or not the rates established by the franchise may be changed without the consent of the grantee is a matter we are not called upon to determine in this case, and we therefore refrain from expressing any opinion thereon.
The town of Vidalia is incorporated under the "Lawrason Act," No. 136 of 1898, and under paragraph 32 of section 15 of that act the town had power "to license ferries and to regulate the same and the landing thereof within the corporate limits." It has therefore control over plaintiff's ferry, and may fix all such rates (at least) as are not fixed in the franchise.
To sum up the whole: The right (if any) of a municipal corporation to fix the rates for a public service rendered to its inhabitants does not come from the inherent power to contract, but from the police power; such grant of police power may be express or may result from necessary implication; it is necessarily implied when the municipality has the power to grant directly or indirectly an exclusive franchise for such public service; and whether the rates fixed at the time of granting such franchise be or be not a contract, the right to fix by compulsion rates not fixed by franchise necessarily resides with the municipality and not with the grantee.
Legislative bodies, however, proceed in their own initiative. They are not like courts, which can proceed only when urged thereto by some party in interest. There is *345 no such thing as citation, or summons, required to enable a legislative body to proceed with its business. It proceeds upon such evidence as it thinks sufficient, and obtains such evidence in the manner it deems proper; no formal pleadings are necessary or even permitted; it is not handicapped in its search for the truth by the formalities required in a court of law. Nevertheless the results obtained by legislative bodies are not appreciably any more unfair than the results obtained by courts.
Be that as it may, a legislative body is not required to give parties, who may be affected by its action, the formal hearing required in a court of law. If it were, there would, of course, be an end to all legislation, for who is not affected by the least legislative action; and the whole community cannot be cited or summoned to show cause why this or that legislation should not be had.
Hence it suffices, to constitute due process of law, that parties affected by legislation should be given an opportunity to be heard when it is attempted to execute the provisions enacted by the legislator. Until then they cannot be hurt.
In the case at bar the plaintiff has been given his opportunity to urge before the courts the objections which he might have urged before the town council; and has been duly heard thereon, which is all that he is entitled to.
His objections have all been considered and disposed of. All except one, to wit, that the rate fixed by the ordinance does not allow him a fair return upon his investment; and that objection we will now proceed to consider.
Three of the judges of this court have read the transcript herein, and our conclusion is that plaintiff has not made a full and fair exposition of the receipts and expenses of operating his ferry; the receipts claimed by him do not correspond at all with a close check kept upon his business by an agent for defendant during the six weeks before this case came up for trial; and from the start plaintiff has made every effort to exclude defendant from any opportunity to get at his receipts and expenditures. It is also apparent that plaintiff is consuming the greater part of those receipts whatever they may be, in high salaries for himself and his sons, which the testimony fails to convince us as being necessary for the proper conduct of the ferry.
Moreover, his estimate of the capital invested in the enterprise is so grossly exaggerated as to furnish not the least basis on which to predicate what would be a fair return. One instance only will suffice. He estimates his ferryboat at $130,000, but apart from his own vague testimony in support of this estimate, he produces no other testimony than that two alleged experts, one of whom makes an admitted error of nearly $80,000 in calculating the value of the steel required for the hull; and had already estimated a better ferryboat in New Orleans for less than one-half the value of plaintiff's. The other bases his estimate upon the value of another vessel to which he compares it, which latter vessel is shown to be several times larger than plaintiff's. On the other hand, a witness for defendant, at least as well qualified as plaintiff's witnesses, testified that he was then building a larger and better boat than plaintiff's for about $28,000.
On the whole, we are satisfied that plaintiff *347 has wholly failed to make out his case. And in this connection it may be remarked that whenever a litigant seeks the intervention of a court in a matter such as this, he ought to bring forward a clear and succinct statement of his receipts and expenses, and of the amount and value of his investments. In the state of the record before us, we cannot reach even the faintest clue as to what plaintiff's receipts and expenses and investment may be; but we are convinced that he has grossly exaggerated the amount of his investment, and are not satisfied that he has made a correct return of his receipts, or that the expenses claimed by him are justified.
We must therefore reject his claim for want of proper evidence to support it; but we see no grounds for allowing attorney's fees.
OVERTON, J., dissents.
LAND, J., dissents and hands down reasons.
Dissenting Opinion
It is stated in the opinion handed down by the majority that —
"The right (if any) of a municipal corporation to fix the rates for public service rendered to its inhabitants does not come from the inherent power to contract, but from the police power; such grant of police power may be express or may result from necessary implication; it is necessarily implied when the municipality has the power to grant directly or indirectly an exclusive franchise for such public service; and whether the rates fixed at the time of granting such franchise be or be not a contract, the right to fix by compulsion rates not fixed by franchise necessarily resides in the municipality and not with the grantee."
The opinion cites no authority to sustain the proposition of law which it announces. In the case of City of Shreveport v. *348
Southwestern Gas Electric Co.,
It is also distinctly held in that case that the power to fix compulsory rates and charges must be delegated to a municipality in clear and unmistakable terms, and that any fair and reasonable doubt concerning the existence of the power is to be resolved against the corporation and the power denied.
The reason for this holding is that the power compulsorily to fix rates is a high attribute of sovereignty, not particularly needed by municipalities for properly functioning, and not usually delegated to them, and therefore cannot result from implication. 28 Cyc. 265; 19 R.C.L. 768. The decision in the case of the City of Shreveport v. Southwestern Gas Electric Co. is based upon City of Scranton v. Public Service Commission,
The Supreme Court of Oregon said in the Woodburn Case:
"The right of the state to regulate rates bycompulsion is a police power, and must not be confused with the right of a city to exercise its contractualpower to agree with a public service company upon theterms of a franchise. The exercise of a power to fixrates by agreement does not include or embrace anyportion of the power to fix rates by compulsion. When Woodburn granted the franchise to the telephone company, the city exercised its municipal right tocontract, and it may be assumed that the franchise was valid and binding upon both parties until such time asthe state chose to speak; but the city entered into the contract subject to the reserved right of the state toemploy its police power and compel a change *349 of rates, and when the state did speak, the municipalpower gave way to the sovereign power of the state." (Italics mine.)
The decisions of the Supreme Court of the United States are to the same effect. City of Winchester v. Winchester Waterworks Co.,
The only power conferred upon the town of Vidalia under its charter is "to license ferries and to regulate the same and the landing thereof within the corporate limits." The power thus delegated goes no further than to authorize the making of contracts granting ferry franchises and to regulate by agreement the rates to be charged by the grantees. Not a word can be found in the authority thus conferred upon the town of Vidalia to justify the grant of any exclusive ferry franchise, or to fix any rate, compulsorily and independently of that consented to by the contracting parties.
The decision of the majority in this case virtually destitutes the state of its sovereignty as to the right of compulsory rate making, a police power inherent in the state, by holding that such power can be surrendered to a municipality by mere implication.
Under such a holding, every town, city, and parish in the state, by virtue of the provisions of section 7 of article 6 of the Constitution of 1921, is removed from the control of the Public Service Commission, because of the powers of "regulation" by implication vested in them at the date of the adoption of the present Constitution. As rates fixed by a municipality in a contract granting a franchise are binding on a city, but not on the Legislature, the moment the power of control by the Legislature over such rates is removed, at that very moment the franchise contract becomes inviolable, as far as a city is concerned, both as to the franchise and as to the rates themselves. *350 The inherent right of the state as sovereign, to act under its paramount police power, and to change the rates fixed in franchise contracts, and, in lieu thereof, to impose reasonable and just rates by compulsion, cannot be surrendered irrevocably by implication or expressly.
Under this decision, if rates for gas, light, water, street car service, etc., as established in franchises already existing, or hereafter granted, are unreasonable and unjust to the public, they must remain so, as the contract granting the franchise and fixing the rate becomes inviolable in all respects.
On the other hand, if such rates are not reasonable and just to the public service corporation, it is at liberty to resort to the federal courts and obtain relief, on the ground that it is not receiving a fair return on its investment.
If contracts fixing franchise rates are inviolable, as to such rates, how can the obligation of such contracts be impaired by any municipality surrendering its "powers of supervision, regulation, and control," to the Public Service Commission by the vote of a majority of the qualified electors cast at an election held for that purpose, under the provisions of section 7 of article 6 of the present Constitution?
But such contracts are not inviolable. In the case of State v. City of New Orleans,
"The rate-making authority over public utilities is an attribute of sovereignty, inherent in the state, as an element of her police power. It has been decided, in those states where, as in Louisiana, the Constitution forbids an abridgment of the police power of the state, particularly in Missouri, South Dakota, California, Pennsylvania, Montana and Mississippi, that the Legislature cannot surrender irrevocably or bargain away the authority to fix or control rates for public utilities. State v. Public Service Commission, 275 Mo. 201, 204 S.W. 499; Chicago Alton Railroad Co. v. Tranbarger,
238 U.S. 67 , 35 S. Ct. 678, 59 L. Ed. 1204; Atlantic Coast Line v. Goldsboro, *351232 U.S. 548 , 34 S. Ct. 364, 58 L. Ed. 721; Lake Shore Michigan Southern Railway Co. v. Ohio,173 U.S. 285 , 19 S. Ct. 465, 43 L. Ed. 702; C.B. Q. Railway Co. v. Illinois,200 U.S. 561 , 26 S. Ct. 341, 50 L. Ed. 596, 4 Ann. Cas. 1175; Bacon v. Walker,204 U.S. 311 , 27 S. Ct. 289, 51 L. Ed. 499; City of Lead v. Gas Co. (S.D.) 184 N.W. 244, overruling Watertown v. Watertown, etc., Co.,42 S.D. 220 , 173 N.W. 739; City of San Antonio v. San Antonio Public Service Co.,255 U.S. 547 , 41 S. Ct. 428, 65 L. Ed. 777; City of Scranton v. Public Service Commission,268 Pa. 192 , 110 A. 775; City of Woodburn v. Public Service Commission of Oregon et al.,82 Or. 114 , 161 P. 391, L.R.A. 1917C, 98, Ann. Cas. 1917E, 996; O'Keefe v. City of New Orleans (D.C.) 273 F. 560."
This court, in the case of the City of Shreveport v. S.W. Gas
Electric Co.,
The only difficulty in arriving at a correct solution of this matter of rate making has arisen from the confusion occasioned by not invoking the plain distinction between the powers of a municipality to fix rates, as a matter of regulation, in franchise contracts, and the exercise of the police power to fix compulsory rates, which must be delegated by the state, in plain and unmistakable terms, to the municipality, which has no such inherent power. The framers of the present Constitution did not interpret the powers of "supervision, regulation, and control" as including the right to establish rates compulsorily, when clothing the Public Service Commission of this state with its authority, but, in addition to these powers, the Constitution has expressly added, "and to fix reasonable and just rates." *352
If a municipality enjoys, under its powers of "supervision, regulation, and control," the right to fix compulsory rates, it would possess powers equal to those of the Commission itself, and there would be no good reason or real necessity for its surrendering its right of self local government and its powers to that body. From this viewpoint, section 7 of article 6 of the present Constitution would be a useless provision in our organic law.
However, if a municipality was without the police power, plainly delegated, to fix rates by compulsion, its power of "regulation" being restricted to the mere making of rates by agreement in franchise contracts, there would be both good reason and real necessity for the surrender of its inadequate powers to the Commission, if such franchise rates were unreasonable and unjust to the public, in order that reasonable and just rates might be imposed by that body by compulsion.
We are dealing here with contracts, not between individuals affecting private interest, but with contracts granting public franchises to public service corporations; contracts which necessarily affect the general welfare of each city and town in the state. Such contracts necessarily fall within the domain of the police power of the state, in order that the sovereign may give adequate protection to its citizens in the making of just and reasonable rates for the service rendered by public utilities. Lawful contracts of individuals, as they affect private interests only, are not subject to modification by the state, in the exertion of its police power. The obligation of such contracts cannot be impaired by legislative action. But contracts by municipalities, granting public franchises and fixing public service rates, while inviolable as to the franchise itself, are subject to change by the state as to such rates, for, by all contracts of this character, public interest is affected, and *353 into each of such contracts the rate-making element of the police power of the state necessarily enters, and must control, in the interest of the public good.
As contracts granting public franchises are made, subject to the reserved right of the state, under its inherent police power, to change such rates, there can be no impairment of the obligation of such contracts, when the rates are changed.
The decisions of this court, herein cited, are sound in principle, based upon established precedents, and afford ample protection to the public against excessive charges for service rendered by local public utilities. These decisions, therefore, should stand as the settled jurisprudence of this state on the question of the rate-making power.
I therefore respectfully dissent.
Addendum
Plaintiff contends that there are four fundamental errors in the opinion, viz.: That the court erred in holding that paragraph 32 of section 15 of the Lawrason Act empowers the town council of Vidalia to fix compulsory rates for ferriage not agreed on in the franchise; that the court erred in holding that the police power to fix rates for public utilities may result from necessary *354 implication; that the court erred in holding that plaintiff, by virtue of his franchise, enjoys a monopoly, and therefore the town of Vidalia has the implied right to regulate the rates; and that the court erred in holding that, as the Public Service Commission was not in existence when the franchise was granted, the town of Vidalia has power to fix rates not fixed in the franchise.
Plaintiff quotes from the opinion of this court the following:
"The town of Vidalia is incorporated under the Lawrason Act, No. 136 of 1898, and under paragraph 32 of section 15 of that act the town had power `to license ferries and to regulate the same and the landing thereof, within the corporate limits.' It has, therefore, control over plaintiff's ferry, and may fix all such rates (at least) as are not fixed by the franchise."
Plaintiff contends that this expression of the court is in opposition to the views of the text-writers and to the jurisprudence of this and other states. In support of this contention he cites Shreveport Traction Co. v. City of Shreveport,
"The question in the present case is not as to whether the city has not had heretofore the power to fix a gas rate by agreement with the gas company, or might not do so now; but it *355 is as to whether it has thus had, and now has, the power to impose a gas rate by compulsion."
The court was considering the right of the city to fix a compulsory gas rate for the benefit of the general public, and, as the court found, that the power of the city was limited to its regulation, improvement, lighting and watering of streets, alleys, public squares, wharves, and other public property, it is manifest that the city had no power to fix compulsory rates for the benefit of private consumers of gas.
In the case of City of Detroit v. Detroit Citizens' St. Ry. Co.,
We cannot see how these authorities weaken the force of the reasoning or affect, in the least, the conclusions reached in our original opinion.
In Long, Mayor, v. Miller et al. (C.C.A.) 262 F. 362, and City of Sault Ste. Marie v. International Transit Co.,
With respect to ferries, Act 202 of 1902 contains a grant of power to police juries to fix rates, except where the ferry is in the corporate limits of a town or city, and Act 136 of 1898, as amended by Act 111 of 1912, *356 grants to municipalities the right "to license ferries and regulate the same and the landing thereof within the corporate limits."
It is not necessary to add to the clear reasoning of the court in the original opinion which led us to the conclusion:
"That ferries under the control of municipalities are subject to regulation by the governing authorities of such municipalities as to all rates and tariffs not established by the franchise itself."
In State v. New Orleans,
In the case of Baton Rouge Water Works Co. v. La. Public Service Commission, 100 So. 710,1 this court held that the rate-making power had been delegated to the municipality by the following words in its charter:
"The council shall have power to enact all laws and ordinances necessary * * * to provide an adequate water supply."
The charter of the town of Vidalia (Act 136 of 1898), in paragraph 32 of section 15, grants to the municipality the power to "license ferries and to regulate the same and the landing thereof within the corporate limits," and paragraph 1 of section 16 grants to the municipality the power "to fix the rate for the carriage of persons and drayage, cartage and transportation of property, other than by railroads operated by steam within the limits of the municipality." This is an express grant of power to fix rates for transportation, within the corporate limits of the town, and the grant is inclusive except as to railroads operated by steam.
All other questions presented in the application *357 for rehearing and in the brief filed in support of the application are fully and accurately disposed of in the original opinion, and a reconsideration of the case has strengthened our conviction in the correctness of the conclusions announced therein.
Our original judgment is therefore reinstated and made the final judgment of the court; plaintiff, appellee, to pay costs.
OVERTON, J., dissents.
LAND, J., dissents for reasons assigned in dissenting opinion.