Consolidated Ice Co. v. Pittsburgh , 274 Pa. 558 ( 1922 )

Opinion by

Me. Justice Walling,

This suit in equity is for relief from alleged unjust and discriminatory water rates, and is a companion case to Barnes Laundry Co. v. Pittsburgh, 266 Pa. 24, where the facts and controlling legal principle will be found exhaustively stated in the opinion by the present Chief Justice. We may, however, properly recount that Pittsburgh is a city of the second class duly authorized by statute to supply its inhabitants with water. Pursuant to which it has established at an expense of thirty-two million dollars, and operates, a large and efficient plant, which furnishes, and has a monopoly in furnishing, water to nearly the entire city. At first it supplied all classes of customers at flat rates, but years ago, in the interest of conservation, a gradual change to a meter system was inaugurated and has been carried forward until in 1920, of the ninety-three thousand connections, thirty-five thousand were by meters. The city’s policy has been to first place its larger customers upon meters so that now all industrial users of city water take by that method, as do many thousands of domestic users. The plaintiff corporation is extensively engaged in the manufacture of ice and has five plants located in the city, all dependent upon the latter for water, of which a very large quantity is necessary. In 1915 the city placed and has since continued these plants upon meters. The city annually fixes the price of water furnished by meters on a graduated scale, which for the years here in question was eighteen cents a thousand for the first two hundred and fifty thousand gallons, sixteen cents a thousand for the second two hundred and fifty thousand gallons, fourteen cents a thousand for the third two hundred and fifty thousand gallons and twelve cents a thousand for all additional amounts taken during the year; the price was the same to all metered customers regardless of what use was made of the water.

The city pumps about thirty billion gallons of water annually that reaches consumers; of this, about one billion gallons is free water, being for fire protection, street cleaning, etc., twelve billion gallons go to the metered users and the remaining seventeen billion gallons to the flat-rate users. Of the latter, four billion gallons is properly used and the balance (thirteen billion gallons) is wasted. The waste results from careless users, defective fixtures, all night sprinkling, keeping the water running to prevent freezing, etc. So, while the city derives a revenue of only six cents a thousand gallons on the average from its flat-rate customers, when they change to meters, and are prompted by self interest to use care, they save fifty-five per cent from their former flat-rate bills. The average amount received by the city from the meter customers is fourteen and one-half cents per thousand gallons.

In 1918, plaintiff filed this bill praying that the meter rates be decreed excessive and, as against the flat rates, discriminatory, and that the city be ordered to refund the excess amount plaintiff had been compelled to pay thereunder during the years 1916, 1917 and 1918. On demurrer the court below dismissed the bill, but its action therein was reversed by this court (see Barnes Laundry Case, supra) and the record remitted for a hearing upon the merits as to the year 1918, the complaint as to the earlier years being held barred by laches. Thereafter, the bill was amended so as to embrace the years 1918,1919,1920, and the case was heard upon bill, answer, replication and testimony, upon which findings were made both as to facts and legal conclusions; this appeal by plaintiff is from a final decree dismissing the bill.

In our opinion the decree is right. In the Barnes Laundry Case, supra, we held that, “Under the Act of June 16, 1836, P. L. 785, a court of equity has jurisdiction to entertain a bill by a citizen who complains that a municipality has unlawfully arrogated to itself the right to make and enforce unreasonable and discriminatory water rates to his prejudice,” and also (omitting the citations) that, “While, necessarily, a wide range of discretion is allowed municipal authorities in fixing public service rates, and classifications of users is permitted, yet a city operating a legalized monopoly, in the nature of a water plant, cannot give undue or unreasonable preference or advantage to, or make unfair discrimination among, customers, any more than a private corporation similarly situated.” The right of a second-class city to require its water customers to take by meter is undoubted (see section 5, Act of June 15,1915, P. L. 976, 981; Barnes Laundry Case, supra; Wagner v. City of Rock Island, 146 Ill. 139; Ladd v. Boston, 170 Mass. 332; 40 Cyc. 802) or part of them by meter and part by flat rate (Central I. & S. Co. v. Harrisburg, 271 Pa. 340), and that is more especially so during a period of transition. The city is presumed to have exercised a proper discretion in adjusting its water rates (Duquesne Light Co. et al. v. Public Service Commission et al., 273 Pa. 287) and the trial court finds the contrary is not established by the evidence.

The annual rates were fixed at the beginning of each year as nearly as practicable so as to supply water at actual cost, that being the policy of the city, and, as adjusted for the years in question, created only a reasonable surplus; hence, there is no ground for contention that the water rates, as a whole, produced too much revenue. The real gravamen of plaintiff’s complaint is that the rates as fixed unfairly discriminated in favor of the flat-rate users; if so, relief should be granted; but this contention overlooks the practical operation of the two systems. The meter customers pay by the gallon for the water actually used and, of course, conserve it, while the flat-rate customers in effect pay for a water privilege, limited only by the capacity of the fixtures, regardless of the amount used, and the habitual carelessness of many accounts for the enormous waste. But to compel them to pay at fixed rates for all the water, both used and wasted would at once abolish the flat-rate system, as they all would then be, in effect, taking through a common meter where the careful user must pay for the waste of the careless, which would be entirely impracticable and unjust. It therefore does not follow that meter rates are too high, or flat rates too low, because the former is by the gallon much higher than the latter; and the fact that by the installation of a meter the domestic consumer saves a large percentage on his water bill tends to prove the contrary, and there is no finding, nor does the evidence taken as a whole call for any, that the flat rates are actually relatively too low. It is found that like water (all city water being filtered) is furnished under like circumstances to both classes, and that is true, except as to the cost of installing, inspecting and reading the meters and some additional expenses of billing and collecting under that system, which, aside from the question of waste, calls for a higher rate. As such waste water comes from the city’s supply it' costs less than it otherwise, would. Moreover, were meters at' once installed for all the flat-rate users, it would be of no advantage to plaintiff, or to others similarly situated, for the saving in pumpage and equipment would be offset by the loss in revenue.

Plaintiff further contends that water can and should be furnished to the very large users, like itself, at less than the minimum rate of twelve cents per thousand gallons, and supports this contention by expert evidence; but this is contradicted by equally strong expert evidence for the defense, and the trial court found in accordance with the latter. A city is not required to furnish water to any customer for less than cost. There are large manufacturing plants in Pittsburgh using vast quantities of raw water which they pump from the near-by rivers; in fact, there is one such plant that uses as much water as is supplied by the city’s entire water works; so, should the city supply water at a minimum rate less than cost, it might have the disastrous effect of inducing those plants to call upon the city for water in quantities entirely beyond its capacity. Owing to the natural elevation of certain sections of Pittsburgh, water cannot be supplied there as cheaply as in some other cities, which should be considered on the question of rates (Mercur v. Electric Light, etc., 19 Pa. Superior Ct. 519; Souther v. Gloucester, 187 Mass. 552) and its water system being in a transition state from flat rate to meters, may cause slight temporary inequalities; but we are satisfied, from an examination of the entire record, that the city is solving its water problem intelligently and in a spirit of fairness. A city is entitled to a reasonable discretion on the question of water rates (Central I. & S. Co. v. Harrisburg, supra; Reiker v. Lancaster City, 7 Pa. Superior Ct. 149) and the evidence supports the controlling finding of the trial court that, so far as affects this suit and the other suits (fourteen in number) tried with it, “Under all the circumstances, the schedules for metered rates of the City of Pittsburgh in the years 1918, 1919 and 1920 are not unreasonable or excessive) and there has been no abuse of the discretionary power of council in the fixing of the said rates. The present bills of the City of Pittsburgh with respect to flat rates and metered rates are not discriminatory and are fair, just and reasonable schedules.”

There was no discrimination here between industrial and domestic users, as the meter rates were the same to both, so the trial judge’s suggestion of the right to make such discrimination was mere dicta and not a factor in the decision of the case. We agree with the court below that, “The facts and circumstances disclosed by the evidence are not such as to make it the duty of the court to declare the schedule of rents and rates ordained by the council either unlawful, unreasonable or unjustly discriminatory, and the bill will, therefore, be dismissed.” That the city supplies itself with free water for fire protection, etc., and also supplies free water to certain public charities, is not an abuse of discretion and affords its pay customers no just ground for complaint: see Preston v. Water Commissioners, 117 Mich. 589.

■The decree is affirmed and appeal dismissed at the costs of appellant.