268 Pa. 243 | Pa. | 1920
Opinion by
This is an action of assumpsit for water supplied to defendant borough. The Suburban Water Company, appellant, as a public service corporation, had furnished water to the borough for fire protection since 1893. It filed its schedule with the Public Service Commission March 1, 1918, which, after due advertising, was to become effective April 1, 1918. Appellee filed a complaint to the rates there set forth, but continued to receive and use appellant’s commodity, and, when sued for the price thereof, refused to pay, setting up as a defense (1) that no contract with the municipality for this service had been approved by the Public Service Commission; and (2) that no contract had been secured as required by the borough code. A demurrer to defendant’s statement having been filed, the court below, on consideration of
The Public Service Act of 1913, in articles II and III, authorizes utilities to make and collect rates. By section 1, clause D, of article II, P. L. 1378, and section 54, of article VI, P. L. 1436, these utilities were required to file with the commission, on or before January 1, 1914, existing tariffs and schedules. It is not contended appellant did not comply with these provisions of the law, or that, on the date when the Public Service Act went into effect, it did not have on file its schedule of rates and existing contracts as therein required.
The Public Service Act permits changes to be made by utilities in existing tariffs and schedules, but to do so certain steps must be taken by the utility. Notice to the commission and the public must be given by posting or publishing the proposed change, “which shall plainly state the exact changes proposed to be made in the tariffs or schedules then in force, and whether an increase or decrease, and the time when the proposed changes will go into effectThe schedule must be filed with the commission, posted and published, as indicated, for a period of thirty days, “in the manner, form, and places required with respect to the original tariffs or schedules”: Article II, section 1, clause P. If the commission, or the public affected by the change of rates, is dissatisfied with the facilities, rules, regulations, practices, classifications, rates, fares, tolls, or charges, therein inaugurated, complaints may be filed against such changes and the matter will be determined as provided in sections 2, 3, 4 and 5, of article Vi, P. L. 1403-6. When complaint is made before the rate goes into effect, which is prior to the thirty-day period of filing and publication, the commission shall make due investigation in the manner particularly set forth in the act. It shall determine “as to the propriety of such proposed change and of the new rate, practice, or classification. After such hearing
The Public Service Law does not recognize any right to change a rate other than a published tariff rate, either in an individual or a municipality; the rate is at all times subject to the determination of the commission that it is just and reasonable, and it may be changed by
Where rates have been complained against, either before or after they become effective, the commission has power, by general rule or special order, to require the utility to furnish its consumers or patrons a certificate or other evidence of “payment made by them in excess of the prior established rate ” and, upon petition after final order, may make a further order of reparation directing payment to the consumer of any damage sustained by him in consequence of the payment of any unjust or unreasonable rate. The utility, with the possible exception of three classes constituting special rates thus far very rarely in use in Pennsylvania, may not of its own motion have an affirmative order approving its rates; for nowhere in the act is such authority given. The act was intended to prevent ex parte approvals having the effect of contested approvals, and the only method to test the reasonableness of a rate is by complaint filed, as was done in this case, or by proceedings on the part of the commission of its own motion. While the investigation as to reasonableness of a rate under complaint is pending, “the rate to be charged......is the one fixed and published in the manner pointed out in
It is contended, however, that, while this may be true as to domestic and industrial concerns, it is not true as to municipalities for the reason that the Borough Code, as amended by the Act of 1917, declares how boroughs may provide a supply of water, and that section 11, article III, of the Public Service Act, prescribes how contracts with municipalities may be made valid. The Borough Code specifically excepts provisions of the Public Service Act: “Nothing in this act shall be construed to repeal any of the provisions of the Public Service Law”; if it did not, what we later say on this subject in discussing section 11, article III, would apply. This section reads as follows: “No contract or agreement between any public service company and any municipal corporation shall be valid unless approved by the commission: Provided, that, upon notice to the local authorities concerned, any public service company may apply to the commission, before the consent of the local authorities has been obtained, for a declaration by the commission of the terms and conditions upon which it will grant its approval of such contract or agreement, if at all.” This section does not control, for the following reasons: (1) The contract therein contemplated does not embody a charge for service fixed under an effective
Moreover, when a rate becomes effective, it is a rate established by law. It cannot be varied by the parties, and the company departs therefrom at its peril. Having satisfied every requirement of the act, it has become a collectible, suable rate until it is set aside in the method provided in the act. It is, therefore, for the time being, a legislative rate. It clearly was not the intention to include the “furnishing of all such service at prices, charges or rates” effective and collectible on all patrons alike, under the term “contract” as mentioned in section 11, article III, or to subject such legislative rate to a further revisory control in municipalities in that it must consent, thus tending to destroy the scheme of the act on this subject.
It was stated at the argument, and noted in the papers, this company had supplied the borough with water since 1893. It is entitled to the benefit of the presumption that all things were done as directed by law, and it would be fair to assume this furnishing was by a contract in existence when the change of rates was made in 1918; and, while we have held that the acts of public service companies, under the Public Service Law, supersede the acts of these companies with their patrons when they are in conflict, it is not exactly correct to say the entire contract is annulled. It may still be a contract between the parties, modified or enlarged by the acts of either the company or the commission, under the Public Service Law, and, if the consumer sees fit to recognize a change, it is still a contract. All public service contracts are viewed in the light of having been made with an implied provision that the rate named therein is subject to change, according to law, so as to keep it reasonable and nondiscriminatory at all times: Pinney & Boyle Co. v.
The reason for this rule is simple, as shown by the many cases which hold that the change of a rate fixed by contract for the performance of service by a public utility company does not impair the obligation of the contract under the Constitution of the United States, and, if it did, the change would he unlawful: Pinney & Boyle Co. v. Los Angeles Gas & Electric Co., L. R. A. 1915, C. 282, 287; Knoxville Water Co. v. Knoxville, 189
Our own cases and those from other jurisdictions throughout the United States hold the change in rates'; so as to make them reasonable and nondiscriminatory, is not an impairment of the obligation of a contract to be performed by a public utility company. It is beyond the power of the contracting parties to fix the rates permanently, and the contract remains in full force and effect, binding on both parties as long as the obligation is unimpaired. See opinion of Chief Justice Bkown, Scranton v. P. S. C., 268 Pa. 192, for a discussion of the theory upon which this principle rests.
The cases of V. & S. Bottle Co. v. Mountain Gas Co., 261 Pa. 523; Leiper v. B. & O. R. R. Co., 262 Pa. 328; and Central R. R. of N. J. v. Mauser, 241 Pa. 603, do not in any way affect the conclusion just reached. In these cases this court held that an illegal rate could not be enforced, and decided nothing inconsistent with our present decision. These rulings are in perfect accord with the cases cited, supra. If they are to be construed to support a position that the whole contract is invalidated by
But whether there was, or was not, a contract, under the Public Service Act, when the company has changed a rate in accordance with the provisions of the law, that rate, on the day advertised, is an effective rate, suable and collectible, and it is not governed or controlled by section 2 of article III. But, it has been said, if we permit public service companies to collect rates which may thereafter be determined unreasonable, the interests of the municipality may be jeopardized, as may its other patrons, in that they may never be able, because of the company’s insolvency, to be recouped of excess payments thus made. As the case is now presented, it is sufficient for us to say there is no allegation that this company is not financially responsible for any damages occasioned by the excess payments. Under the very broad powers given to the commission by section 27, of article Y, the commission may enforce, execute and carry out, by its order, all the provisions of the act relating to the duties and limitations of public service companies, including the obligation to make reparation, and no court would think of declaring an act of the commission unjust and unreasonable which would require from a public service company, subject to the commission’s approval, a bond to indemnify its patrons against loss where there is danger of the company’s insolvency. We propose to apply the spirit of such an order in this case. The court below was in error in holding that the Borough Code and section 2, of article III, controlled the questions before it.
Appellee to pay the costs.