125 Va. 469 | Va. | 1919
after making1 the foregoing statement, delivered the following opinion of the court:
The assignments of error raise the questions which will be passed upon in their order as considered below.
The controlling question in the cases before us is this—
If so, because of article 1, section 10 of the Constitution of the United States, which prevents the impairment of the obligation of contracts, it is firmly settled that the rates as fixed in the franchises are irrevocable during the franchise periods, without the consent of the municipality, as well as of the holder of the franchise, to a change. Detroit v. Detroit, etc., R. Co., 184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592; New Orleans Gaslight Co. v. Louisiana Light, etc., Co., 115 U. S. 650, 6 Sup. Ct. 252, 29 L. Ed. 516; New Orleans Waterworks Co. v. Rivers, 115 U. S. 674, 6 Sup. Ct. 273, 29 L. Ed. 525; St. Tammany Waterworks Co. v. New Orleans Waterworks Co., 120 U. S. 64, 7 Sup. Ct. 405, 30 L. Ed. 563; Walla Walla v. Walla Walla Water Co., 172 U. S. 1, 19 Sup. Ct. 77, 43 L. Ed. 341; Cleveland v. Cleveland, etc., R. Co., 194 U. S. 517, 24 Sup. Ct. 756, 48 L. Ed. 1102; Cleveland v. Cleveland, etc., R. Co., 201 U. S. 529, 26 Sup. Ct. 513, 50 L. Ed. 854; Los Angeles v. Los Angeles City
As said by the Supreme Court in the case of Detroit v. Detroit, etc., R. Co., supra (184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592), on the subject of the authority of municipalities to make an irrevocable franchise contract fixing rates of charges of a street railway company: “* * . * there can be no question in this court of the competency of a State legislature, unless prohibited by constitutional provisions, to authorize a municipal corporation to contract’ with a street railway company as to the rates of fare and so to bind during the specified period any future common council from altering or in any way interfering with such contract.” Citing a number of the above-cited Supreme Court cases.
■ In New Orleans Waterworks Co. v. Rivers, supra (115 U. S. 674, 6 Sup. Ct. 273, 29 L. Ed. 525), it was held that a franchise allowing the company to fix water rates, but subject to the condition that its net profits should not exceed a certain per cént, was a contract protected by the Federal Constitution, which the State itself could not impair by revoking it, even though the revocation was attempted by th¿ State Constitution adopted after the grant of’the'fran■chise and its acceptance by the grantee Óf it and action-by the latter thereunder in performance of the contract. To the same effect are the cases of St. Tammany Waterworks
“* * * this court has too often decided for the rule to be now questioned that the grant of a right to supply gas or water to a municipality and its inhabitants through pipes and mains laid in the streets, upon condition of the performance of its service by the grantee, is the grant of a franchise vested in the State, in consideration of the performance of a public service, and, after performance by the grantee, is a contract protected by the Constitution of the United States against State legislation to impair it.1" Citing a number of cases.
And it is true, as also said in substance in the case last cited, that the principle involved is the same whether the franchise is granted directly by the State or by a municipality authorized by the State to do so, provided the authority is expressly conferred upon the municipality.
It is said, in substance, in Los Angeles v. Los Angeles City Water Co., supra (77 U. S. 558, 20 Sup. Ct. 736, 44 L. Ed., at p. 892) : It cannot be contended that it is not competent for the State to give municipalities the power to bind the State, so that such a contract cannot be revoked by the State after it has been entered into by the municipality by granting the franchise and the grantee thereof has accepted and entered upon part performance of the contract under the franchise.
As said by the Supreme Court in the very recent case of Columbus Ry., etc., Co. v. Columbus, supra (249 U. S. at p. 419, 39 Sup. Ct. 349, 63 L. Ed. —) : “That a city acting under State authority may, in matters of proprietary right, make binding contracts of the nature contained in
And, as is said by the Supreme Court in Home Teleph. and Teleg. Co. v. Los Angeles, 211 U. S. 265, 29 Sup. Ct. 50, 53 L. Ed. 176: “It has been settled by this court that the State may authorize one of its municipal corporations to establish, by an inviolable contract, the rates to be charged by a public service corporation (or natural person) for a definite term * * * and that the effect of such a contract is to suspend, during the life of the contract, the governmental power of fixing and regulating rates,” citing cases.
The authorities cited and relied on by the plaintiff in error, the said company, are very numerous, but they have all been carefully considered, and the holding of none of them goes beyond what is said in thé next preceding paragraph. They cover cases arising under many different statutory provisions, so many indeed as to render it impracticable to discuss such cases in detail in this opinion' with any profit, since the distinguishing features of the various statutes would have to be developed in order to'render such discussion at all helpful to a clearer view of the issués involved. Those authorities are as follows: Milwaukee Elec. R. & L. Co. v. Railroad Com., 238 U. S. 179, 180, 35 Sup. Ct. 820, 59 L. Ed. 1260; City of Woodburn v. Public Serv. Com., 82 Or. 114, 161 Pac. 391, 393, L. R. A. 1917 C, 98 ; Benwood v. Public Serv. Com., 75 W. Va. 127, 83 S. E. 295, L. R. A.
Most of the cases last above cited involve merely the construction of municipal charters or other statutory authority of the municipalities to make the contract as to rates in question; and in them the contract as made is either in terms not irrevocable during its life or the municipality has not been plainly authorized to make such a contract. Another circumstance may be mentioned in connection with these cases, namely: all of them deal with statutory authority where there is no constitutional provision expressly authorizing municipal action or expressly contemplating legislative enactment authorizing municipal action in the premises.
In the cases before us there is no question but that the contract as to rates as made by the franchises mentioned in the statement preceding this opinion are in their terms irrevocable during the life of such franchises, respectively.
We come, then, to consider whether the constitutional and statutory provisions quoted in the statement preceding this opinion expressly conferred- upon the municipalities, which are the defendants in error, the authority to make the con
Since there is no conflict between the statutes, sections 1033-d, 1033-e and 1033-f, above cited and quoted, and sections 124 and 125 of the Constitution of this State, it is unnecessary for us to determine whether such constitutional provisions alone are sufficient to expressly confer the authority in question. We, in truth, have merely to consider whether such statutes expressly confer such authority. But in construing such statutes, the fact that such constitutional provisions not only permit, but in effect are mandatory in their requirement that the legislature must enact said sections 1033-e and 1033-f, or at least some statute on the subject, so as to carry section 125 of the Constitution into effect, is illuminating upon the question we have under consideration. For we have here not merely legislative expression on the subject, but also constitutional expression.
The provision of the charter of the town of Lexington
So we see, that neither under section 156(b), nor under any statute enacted in pursuancé thereof, was the contract power conferred upon the municipalities (the defendants in error) of which we are in search.
It was under this section of the Constitution that said statute of 1914 was enacted. When the State first undertook to put into active eifect its dormant power of regulation of rates aforesaid, it imposed the duty of its exercise upon the State Corporation Commission. And the commission has undoubted jurisdiction and authority under such constitutional and statutory provisions to exercise such supervisory power of regulation as to all such rates as have not been irrevocably fixed by franchise contracts such as aforesaid. But we do not find that such section of the Constitution or statute law confers the municipal power of contract of which we are in quest.
; It is true that this section of the Constitution is not self-executory. It needs subsequent legislation to put into effect the power conferred upon municipalities of making the franchise contracts. Such legislation might, prior to the action of the municipalities, which are the defendants in error, in granting the franchises in question before us, have prescribed some limitations on the aforesaid power-to contract; consisting of restrictions upon their power to make the franchise contracts binding during the whole franchise period, as is in effect provided in the section of the Constitution under consideration might be done; but we see, when we examine the statutes, that they did not impose any such limitation. On the contrary, sections 1033-e and 1033-f, in their provisions, quoted in the statement preceding this opinion,. make it plain that the unlimited power to make such binding contracts during the whole franchise period is thereby expressly conferred upon the municipalities. So expressly are they authorized to make unlimited contmcts and so binding are the contracts as such that the courts mentioned in section 1033-f are given jurisdiction by mandamus “to enforce compliance by said cities and touMs and by. all grantees of franchises * * '* with all the terms and contracts arid obligations of either party, as contained- in franchises.>> (Italics supplied.) The latter section of the statute further recognizes the binding nature of the franchise contract aforesaid, especially as to rates, during -the
The case of Commonwealth v. Richmond, etc., Railroad Co., 115 Va. 756, 80 S. E. 796, involved such a modification of the original franchise provisions, and this court regarded the franchise as a contract with respect to the street railway rates. It is true that the question we have under consideration was not directly involved in that case, but it is mentioned because much discussed in argument before us in the instant cases. Further:
As the Constitution and statute law stood, at the time the franchise contracts in question were entered into, the provisions of such contract and the bond required, as set forth in the statemént preceding this opinion, were alone relied upon to fix during the life of the franchises the rates aforesaid. No provision was made by law restricting the power of the municipalities to an initial fixing of such rates subject to future regulation thereof. And no such provision even yet exists in our statute law, although it might be enacted, as aforesaid. The power is still left vested in municipalities to irrevocably fix such rates-by franchise contract during the life of the contract.
‘ We conclude, therefore, that the statute law, in existence when and under which the franchisés involved in the cases before us were granted, expressly delegated to the municipalities the unlimited authority to contract with the grantee
In the cases before us, inadequacy of the rates to enable appellant to render efficient service, due to unforeseen change in economic conditions, is urged in argument as the gravamen of the appellant’s complaint upon the facts. Such precisely was the case last cited; and the court in that case said: “It may be, and taking the allegations of the bill to be true, it undoubtedly is, a case of a hard bargain. But equity does not relieve from hard bargains simply because they are such.” That statement is equally true of the jurisdiction of the State Corporation Commission in the cases before us. The franchises involved in the cases before us being contracts duly authorized as aforesaid, their provisions fixing the rates are binding during the franchise periods, unless and until they are modified by consent of both parties, the municipalities and the holder of the franchises, the former acting in that behalf in accordance with the permissive provisions of the statute on the subject aforesaid.
There is, of course, no question but that powers which are conferred upon municipalities by the legislature may be by the legislature revoked at any time; but such revocation can affect only the validity of future action of the municipalities under the revoked authority.
On principle, contracts made by municipalities under delegated authority cannot differ from contracts made by any other agent upon the question of the effect of the revocation of the authority of the agent. The revocation of the authority comes too late to affect contracts previously made in accordance with the authority. The revocation can affect only the authority of the agent to make contracts thereafter as binding on the principal. And so we find the authorities hold. Pond on Public Utilities, sec. 512.
8. In the case of People, ex rel., W. S. Street Ry. Co. v. Barnard (1888), 110 N. Y. 548, 18 N. E. 354, the conclusion was reached that the general statute law of the State on the subject of the granting and sale of franchises by
4. We should perhaps especially mention the case of Freeport Water Co. v. City of Freeport, 180 U. S. 587, 21 Sup.Ct. 493, 45 L. Ed. 679, which is not cited or relied on by counsel for the plaintiff in error, but which is frequently referred to in the authorities whieh are above cited as relied on by the plaintiff in error company. As that case is '^sometimes quoted from,'it would seem as if it were in con
7. The plaintiff in error company, however, earnestly relies upon section 164 of the Virginia Constitution of 1902 to sustain its position that the police power of the State to regulate the rates in question was not and could not have been vested in municipalities by the statute law of Virginia aforesaid, so as to authorize them to make contracts surrendering such continuing dormant power residing in the State in its sovereign capacity, without violation of such constitutional provision. Such section of the Constitution is as follows:
As above seen, by the Constitution of 1902 and the legislation up to that time, and indeed since, until the statute of 1914, aforesaid, no provision was made for the exercise of the power of regulation of rates of charge of such corporations as is the plaintiff in error. Section 164 of the Constitution, therefore, has reference to the theretofore unex-ercised and dormant power of the State to regulate rates.
8. It is contended by the defendants in error that it appears from the concluding provision of section 8 of the statute of 1914, aforesaid, which is quoted in the statement preceding this opinion, that said sections 1033-e and 1033-f of Pollard’s Code of Virginia are therein referred to, and that the 1914 statute was not intended to, and does not in fact, confer jurisdiction upon the State Corporation Commission to regulate rates which have been fixed by the provisions of charters granted under such sections of Pollard’s Code.
The question is not free from difficulty. In view, however, of the conclusions above reached, we shall not enter upon a consideration of that question.
For the foregoing reasons we find no error in the orders of the State Corporation Commission under review, save to the extent that they, without any investigation or consid
Affirmed.