121 P. 1069 | Okla. | 1912
Lead Opinion
On March 24, 1908, the Corporation Commission, pursuant to article 9, sec. 18, of the Constitution, made due publication of proposed order No. 18, addressed "To all Telegraph Companies Doing Business in the State of Oklahoma." On July 14, 1908, the Western Union Telegraph Company filed its objections thereto. After several hearings, consisting solely of the testimony of J. C. Nelson, superintendent of the appellant, the Commission, on December 1, 1908, issued a final order, which reads:
Assuming, as is contended, that there was no evidence before the Commission tending to prove that the existing rate was unreasonable, it does not follow that the Commission had no jurisdiction to fix the rate complained of. This for the reason that jurisdiction to fix the rates in the premises is vested in the Commission by article 9, sec. 18, supra, which reads:
"The Commission shall have the power and authority and be charged with the duty of supervising, regulating, and controlling all transportation and transmission companies doing business in this state, in all matters relating to the performance of their public duties and their charges therefor, and of correcting abuses and preventing unjust discrimination and extortion by such companies; and to that end the Commission shall, from time to time, prescribe and enforce against such companies, in the manner hereinafter authorized, such rates, charges, classifications of traffic, and rules and regulations, and shall require them to establish and maintain all such public service, facilities, and conveniences as may be reasonable and just, which said rates, charges, classifications, rules, regulations, and requirements, the Commission may, from time to time, alter or amend. All rates, charges, classifications, rules, and regulations adopted, or acted upon, by any such company, inconsistent with those prescribed by the Commission, within the scope of its authority, shall be unlawful and void."
And the objection that it fixed rates without evidence to support the order would not run to the jurisdiction of the Commission to make the order, but to the reasonableness and justice of the order when made. Assailing the order, appellant contends that the rates therein prescribed are unreasonable, in that the same, if put in force, would fail to yield a fair return upon the present value of its property, used in the business within this state. That appellant is entitled to such return upon its investment goes *420
without saying. Pioneer Telegraph Tel. Co. v. Westenhaver etal.,
In A., T. S. F. Ry. Co. v. State,
"Whilst it is true that public service corporations may be required to render reasonable service for the public, yet that does not mean that the public must have service, regardless of whether or not the same may be at a loss to the public service corporations."
In Smythe v. Ames,
"A state enactment, or regulation made under the authority of a state enactment, establishing rates for the transportation of persons or property by railroads, that will not admit of the carrier earning such compensation as, under all the circumstances, is just to it and to the public, would deprive such carrier of its property without due process of law, and deny to it the equal protection of the laws, and would therefore be repugnant to the fourteenth amendment of the Constitution of the United States."
In Beale Wyman on Railroad Rate Regulation, sec. 406, it is said:
"According to modern views upon the constitutional guaranties, an adequate return upon the true value of the property devoted to the public use by those who conduct a public service ought, in all normal cases, to be left; otherwise it is conceded that they are in effect deprived of their property without due process of law, if their rates are so reduced by public authority as to leave no such adequate return. And this is based upon sound public policy. It ought always to be plain that those who invest their funds in some public employment are going to get a fair per cent. upon their investment, because, unless they are assured of this, they will employ their money elsewhere, and many enterprises necessary for the public convenience will not be undertaken; nor will existing plants be extended. It is, then, not only due consideration for the rights of others who have already invested their money in public service companies, but also an enlightened selfishness, with a view to the future, which dictates the policy that a reasonable return upon the value of the property used in the public service shall be held to be protected by the Constitution."
In the Westenhaver case, supra, we said:
"The rule generally established by the courts, including the Supreme Court of the United States, for determining the validity *421
of legislative acts, or of orders of boards or commissions, prescribing rates, is that the act is valid, unless the rates be unreasonable to the extent that their enforcement would be equivalent to the taking of property for public use, without such compensation as, under the circumstances, is just to the owner and to the public. The rate is fair, when its application will yield a fair return upon the reasonable value of the property at the time it is being used for the public. It is unfair, when it does not yield such return. Knoxville v.Knoxville Water Co.,
There is no dispute as to the facts and figures. Appellant's lines are along the right of way of every railroad in the state and consisted of:
4,543.46 miles of poles at $40 .................. $181,738.40 15,846.91 miles of iron wire at $10 ............. 158,469.10 2,008.75 miles of copper wire at $20 ............ 40,175.00 Miscellaneous ................................... 1,151.60
— and were, on January 1, 1908, of a total physical valuation of $381,554.10. Its gross earnings credited to Oklahoma for the year ending June 30, 1907, were from three sources, to wit:
Intrastate ...................................... $ 31,525.49 interstate and transstate ....................... 152,039.93 Miscellaneous, such as leased wire, etc. ........ 17,530.70 ----------- In all ...................................... $201,116.12
Its gross expenses for that time were:
Managers, operators, clerks, messengers, and other employes ............................ $ 87,887.54 Rent, light, and fuel ........................... 8,990.25 Battery maintenance, instruments, and other supplies ................................ 16,234.95 Maintenance and repairs of lines ................ 12,544.18 Reconstruction of lines ......................... 26,984.77 Railroad companies' proportion of net receipts .. 9,552.45 Executive and legal expenses and superintendence 16,449.79 Texas (Oklahoma Territory) ...................... 6,844.32 Other miscellaneous expenses .................... 7,495.12 ----------- Total ....................................... $192,983.37
Showing its net earnings for that time, including interstate, intrastate and transstate, to be $8,132.75, and its sole return upon an investment of $381,554.10, or less than 3 per cent. It is insisted by appellant that, as the estimated effect of the enforcement *422 of the rate would still further reduce its net earnings, the order is clearly unreasonable, and should be reversed. The answer made to this contention is that the item of "Railroad Companies' proportion of net receipts, $9,552.45" should not be charged as an item of gross expense, but as an item of "net receipts," which, when added thereto, would make the net receipts of appellant, instead of $8,132.75, $17,685.20. To this it is enough to say that this is contrary to the findings of the Commission, which, in making up the items of gross expense comprising the total of $192,983.37, claimed by appellant, allowed said amount of $9,552.45 as an item of proper charge to the gross expense account. This was permitted by the state to go unchallenged before the Commission; but the Attorney General insisted in open court, on the argument, that it should not be allowed, and the court thereupon offered to remand the case to afford the state an opportunity to show the error. This offer was impliedly declined by the Attorney General, and, being supported by the evidence, the item will not be disturbed. Besides, it appears from the undisputed testimony that this sum was actually paid by appellant, pursuant to a working contract with certain railroad companies for certain privileges almost indispensable to the prosecution of the business of the appellant, without which, as found by the Commission, "the telegraph company could maintain offices and agents only at comparatively few stations within Oklahoma."
But the real question here is whether the Oklahoma rates — that is, the intrastate rate sought to be displaced by the order complained of, less all expenses properly chargeable against the same — yield a reasonable return upon the investment. If they do not, the order reducing them is unreasonable. If the interstate rates are too high, Congress alone has jurisdiction to interfere and correct them. We take it that the same rule applies here as applies in the fixing of freight rates. In Smythe v. Ames, supra, in the syllabus, it is said:
"The reasonableness or unreasonableness of rates prescribed by a state for the transportation of persons and property wholly within its limits must be determined without reference to the interstate business done by the carrier, or to the profits derived from that business. The state cannot justify unreasonably low *423 rates for domestic transportation, considered alone, upon the ground that the carrier is earning large profits on its interstate business, over which, so far as rates are concerned, the state has no control; nor can the carrier justify unreasonably high rates on domestic business, upon the ground that it will be able only in that way to meet losses on its interstate business."
To ascertain whether the intrastate rate sought to be installed would yield a fair return upon the capital investment, Justice Brewer, in Ames v. Union Pac. Ry. Co. (C. C.) 64 Fed. at page 179, lays down the rule thus:
"We have an attempt by the Legislature to prescribe a maximum tariff for only the transportation of freight within the limits of Nebraska, and are called upon to determine whether the rates so fixed are unreasonable, and afford no fair compensation to those who have invested their means in these railroad properties. In order to determine this, we must ascertain what it costs to carry this local freight, what the receipts have been therefrom, and what reduction will be made in such receipts by the application of this act, and then we must take such proportion of the gross investment in the road as the present earnings from the local freight bear to the total earnings of the road. From these computations, we may see whether the reduction made by this act in the local freight, if applied to all the company's business, would leave any compensation to the owners, and, if so, how much."
In applying this rule, it is sufficient to say, as contended (and the contention is unchallenged), that, dividing the capital of appellant invested in the state ($381,554.10) between its intra- and its interstate business in proportion to the earnings of each, we find that about 24.4 per cent. thereof, or $93,099.20, is used in conducting its intrastate business, and upon which appellant is entitled to a fair return; that, dividing $192,983.37, or the total expense of conducting both its intra- and interstate business on the same basis, $47,087.76 thereof should be borne by the former. This amount, deducted from $49,076.19, the total income from intrastate business from all sources, leaves the net income derived from this source for the fiscal year ending June 30, 1907 (the latest data available), $1,988.43, which, less $3,250, the reduction incident to the enforcement of the order complained of, would require appellant to conduct its intrastate business at a *424 loss. We are therefore of opinion that the rates sought to be put in force are unreasonable, and the order, to that extent, should be reversed; and, inasmuch as the return of $1,933.43 is but little in excess of 2 per cent. on the investment of $92,526.74, used by appellant in conducting its intrastate business, that the rate sought to be displaced should stand.
To the contention of appellant that it has a right to operate under its own rules, which, when fixed, are presumptively right and reasonable, and that upon him who assails them lies the burden to prove the same to be unfair, we will not speak, except to say that the record discloses no rules of appellant which the remainder of the order seeks to displace; and that all remaining for us to consider is whether appellant has fairly overcome the presumption attaching thereto that the same is prima facie just, reasonable, and correct. That it has so fairly overcome said order as to all of so-called "Rule 2," except that part requiring telegraph companies to transmit each other's messages when necessary to reach a point of destination, is conceded.
It is next contended that the Commission was without jurisdiction to make that part of the order complained of, known as "Rule 7," which reads, "No extra charge shall be made for delivering a telegraphic message in cities or towns in this state within a radius of two miles from the office of the delivering telegraph company, provided that such point of final delivery is within the corporate limits of such town or city," for the reason that the same is an interference with interstate commerce. The effect of that part of the order is to establish a free delivery limit, and applies alike to interstate, intrastate, and government messages. As the transmission of telegrams between states is interstate commerce, and an interference with their delivery an interference with that commerce, it is for us to determine whether that part of the order is such an interference as to bring it in conflict with the commerce clause of the Constitution.
In Telegraph Co. v. Tex., 105 U.S. at page 464 (26 L.Ed. 1067), the court said:
"In Pensacola Telegraph Co. v. Western Union Telegraph Co.,
When a state, by statute, imposes a restriction on interstate telegraphic messages such statutes are void.
In Wabash, etc., Co. v. Illinois,
"* * * That a statute of a state, intended to regulate or to tax or to impose any other restriction upon the transmission of persons or property or telegraphic messages from one state to another, is not within that class of legislation which the states may enact in the absence of legislation by Congress; and that such statutes are void, even as to that part of such transmission which may be within the state."
In Butner v. Western Union Telegraph Co.,
"An act of the territorial Legislature, which regulates the order of receipt and transmission of telegraphic messages, and prescribes a penalty for its violation, but which does not attempt to regulate the delivery of messages outside the territory, or of messages sent from without the territory, is not in conflict with the constitutional provision giving to Congress the right to regulate commerce between the states and territories." *426
— Clearly implying that any regulation of the delivery of messages by the state, sent from without the state, which hampers the delivery is in conflict with that part of the Constitution. In other words, the test is whether the proposed order is promotive or obstructive of the duty of the appellant, as a telegraph company, with reference to messages sought to be delivered. If it is a mere regulation of the delivery of its messages, and promotive thereof, it is not in conflict; but if it amounts to more than a mere regulation, and to an obstruction of such delivery, it is in conflict with the Constitution.
In Western Union Tel. Co. v. James,
"In one sense, it affects the transmission of interstate messages, because such transmission is not completed until the message is delivered to the person to whom it is addressed, or reasonable diligence employed to deliver it. But the statute can be fully carried out and obeyed without in any manner affecting the conduct of the company with regard to the performance of its duties in other states. It would not unfavorably affect or embarrass it in the course of its employment; and hence, until Congress speaks upon the subject, it would seem that such a statute must be valid. It is the duty of a telegraph company which receives a message for transmission, directed to an individual at one of its stations, to deliver that message to the person to whom it is addressed, with reasonable diligence and in good faith. That is a part of its contract, implied by taking the message and receiving payment therefor. The statute in question *427 is of a nature that is in aid of the performance of a duty of the company that would exist, in the absence of any such statute; and it is in no wise obstructive of its duty as a telegraph company. It imposes a penalty for the purpose of enforcing this general duty of the company. The direction that the delivery of the message shall be made with impartiality, and in good faith and with due diligence, is not an addition to the duty which it would owe, in the absence of such a statute. Can it be said that the imposition of a penalty for the violation of a duty which the company owed by the general law of the land is a regulation of or an obstruction to interstate commerce, within the meaning of that clause of the federal Constitution under discussion? We think not. No tax is laid upon any interstate message; nor is there any regulation of a nature calculated to at all embarrass, obstruct, or impede the company in the full and fair performance of its duty as an interstate sender of messages. We see no reason to fear any weakening of the protection of the constitutional provision, as to commerce among the several states, by holding that, in regard to such a message as the one in question, although it comes from a place without the state, it is yet under the jurisdiction of the state where it is to be delivered (after its arrival therein at the place of delivery), at least so far as legislation of the state tends to enforce the performance of duty owed by the company under the general law. So long as Congress is silent upon the subject, we think it is within the power of the state government to enact legislation of the nature of this Georgia statute."
If the proposed order establishing a free delivery zone added anything to the burden of delivering messages, or anything to the duties of appellant under the law in connection therewith, we might see how it might be thus objectionable; but it does not. Prior to and unaffected by the order, in the absence of an understanding or agreement to the contrary, the extent of the contract of appellant was the prompt transmission and a diligent effort to deliver the message in the city or town to which the message was sent. Telegraph Co. v. Harvel,
In Western Union Tel. Co. v. Com. Mill. Co.,
"While a state statute which imposes positive duties and regulates the performance of business of a telegraph company is void as a direct regulation of interstate commerce, as decided in Western Union Tel. Co. v. Pendleton,
See, also, Western Union Tel. Co. v. Crovo et al.,
A close analogy lies between the duties of telegraph and express companies with reference to delivering. Wyman on Public Ser. Corp. (section 277) says:
"There are certain services in which a company undertakes delivery within a community. Express matter and telegraphic messages are prominent examples of this."
U.S. Express Co. v. State,
"It is argued that the act is so general as to amount to an attempt to regulate interstate commerce; and that therefore the *429 enactment is void as a whole. As a proper preliminary to a discussion of the principal proposition thus asserted, we shall consider the duty of a carrier by express, in the absence of any statute, laying aside all question as to the delivery of goods by express at small stations, and also the question of usage as affecting the carrier's obligation, neither of which is an element in the case before us. It may be said that it is the duty of a carrier by express to deliver packages received by it to the consignee at his residence or place of business. [Citing authorities.] * * * Having ascertained that the purpose of the statute is merely to require the carrier, under the compulsion of a penalty, to observe its general duty, the question confronts us as to whether the enactment is such an attempted interference with interstate commerce as to make the act void."
And, after quoting Western Union Tel. Co. v. James, supra, as we have done, said:
"It is our conclusion, so far as concerns the objection that the statute is invalid as an attempted regulation of interstate commerce, that it is competent for the state to require carriers of express, under a penalty, to live up to their obligations under the general law, in respect to the delivery of packages in this state; and that therefore the objection is not well taken."
We are therefore of opinion that, far from hampering, the effect of the order is in the interest of good service, "tends to enforce the performance of the duty owed by the company under the general laws," and must stand, unless otherwise successfully assailed.
Assailing the reasonableness of that part of the order, appellant contends:
"The record shows that 33 1-3 per cent. of the stations of the appellant in this state yield a gross monthly revenue of not more than $5, and twenty per cent. of these offices yield not more than $2 a month gross revenue. At all such stations, the appellant is able to furnish service to the people only by employing operators with most of their time devoted to other work. At many such stations, delivery of messages by messenger employed for that purpose is not attempted, and necessarily could not be. The revenue would not permit it."
Assuming such to be the state of the record, the order is not unreasonable. This for the reason that the record fails to disclose that the towns referred to are incorporated, and therefore *430 included within the order. Believing, as we do, that the order means to establish a free delivery zone in incorporated cities and towns only, for a radius of two miles from the delivering office, should the corporate limits extend that far or further, and to the extent of those limits, if not so far, and to leave the rights of all parties in interest, in unincorporated towns, as they were under the general law, and unaffected by the order, we are of opinion that the part of the order thus assailed still bears the presumption of being prima facie just, reasonable, and correct, and must stand.
Assailing that part of the order, designated as "Rule 8," prohibiting the discontinuance of any main telegraph office at which messages are received and sent, without the consent of the Commission, obtained upon application duly filed by the company, it is contended that the record "disclosed that 88 per cent. of the offices of the Western Union Telegraph Company in Oklahoma have gross receipts of less than $50 per month, and about 33 per cent. have gross receipts of less than $5 per month, and about twenty per cent. have gross receipts of less than $2 per month; and that the company is unable to secure the service of an operator for less than $50 per month. It further appears from page 36 of the record that the business is much more active at a number of stations at certain seasons of the year than it is at other seasons; and that the company could afford to maintain telegraph service at a number of telegraph stations at certain seasons of the year when there is absolutely no demand for such service at other seasons. It would certainly seem to be unreasonable and unjust to require the telegraph company to secure the permission of the Corporation Commission to discontinue an office, where the earnings are less than $2 per month, or even $5 per month." We think so too. And for the further reason that, as we have just held that appellant is, independent of the order, already conducting at a loss its intrastate business, as it says, hoping for better times, it would be unreasonable and unjust to enforce a rule, such as the one proposed, which would have the effect of forcing it, contrary to its better judgment, to continue to do business at an office beyond a certain time it had ceased to be *431 profitable, and until such time as consent of the Commission could be obtained, upon application to it. In view of the fact, however, that the discontinuance of a main office, without notice, might result in serious inconvenience to the public, that part of the order complained of is modified, so as to require twenty days' notice to the Commission of a proposed discontinuance, to the end that the best interests of all concerned may be subserved.
As there is nothing of merit in the remaining assignments of error, that part of order No. 149, designated as "Rule 1," prescribing a "scale of rates," and that part of said order, designated as "Rule 2," prescribing a joint rate for separate companies, is reversed and set aside. That part of said order, known as "Rule 8," is modified as stated. The remainder of said order is affirmed.
HAYES, KANE, and DUNN, JJ., concur; WILLIAMS, J., concurs in the conclusion.
Addendum
The parties hereto have filed the following stipulation in this court, for the rendering of judgment in this cause, here set out. The judgment heretofore rendered in this cause is hereby modified, so as to conform to this stipulation.
Order No. 149 of the Corporation Commission, as herein modified, shall become effective on the 10th day of April, 1912.