State Ex Rel. City of Harrisonville v. Public Service Commission

The contract entered into between the Green Light Power Company and the city of Harrisonville contained a schedule of rates to be charged by the company for residence and business houses, during the term of the lease. This contract was submitted to the people of the city of Harrisonville at an election held August 16, 1918, and the same was ratified by a majority of the citizens voting, as stated in the majority opinion.

We are of the opinion that the evidence demonstrates that no emergency existed justifying the Commission in abrogating the contracts entered into by the company with the city, notwithstanding the fact that by Section 10535, Revised Statutes 1919, the burden of proof in these proceedings is on relator.

The right of private contract is safeguarded by our State and Federal constitutions. There is no question here of the State confiscating the company's property. The State, under its police power, may not increase the rates fixed by the contracts in order that the company may have a reasonable income from its investment and pay dividends to its stockholders. It can only do that, if it can in any case relieve against a contract, when it is clearly shown that the public welfare demands it in the specific case.

The company asked the Commission to increase its rates to meet the increased cost of fuel, taxes and wages. The purpose is clearly avowed. It would have the Commission obligingly rewrite the contracts with its patrons, so as to shift this increase in the burden it has solemnly agreed to carry onto the shoulders of the other parties to the contracts, and so enable the company to earn its former profits.

There was no finding, nor was there any evidence justify a finding, that the company could not continue to perform its functions. The burden was on the company to prove that an emergency existed justifying an increase in the rates the parties had contracted should be paid. On the contrary, the evidence demonstrates that there was no emergency.

In Louisana v. Louisana Water Co., P.U.R. 1918 B, 774, l.c. 778, our Commission said: "While, as above stated, we hold the Commission possessed the requisite power, yet it is undoubtedly true that increasing the rates above the price at which a company solmenly agreed to furnish its commodity, and in return for which it received a permit to use the streets and a practical monopoly of the business, should not be done lightly, or unless the public interest is threatened in some way if the existing rates are allowed to continue. It is entirely from this standpoint of the public interest that state regulations of public utilities has been attempted."

In Southern Iowa Electric Co. v. City of Chariton, 41 S.C. 400, the late Chief Justice WHITE delivering the opinion of the court, said: "Two propositions are indisputable: (a) that although the governmental agencies having authority to deal with the subject may fix and enforce reasonable rates to be paid public utility corporations for the services by them rendered, that power does not include the right to fix rates which are so low as to be confiscatory of the property of such corporations [citing cases]; and (b) that where, however, the public service corporations and the governmental agencies dealing with them have power to contract as to rates, and exert that power by fixing by contract to govern during a particular time, the enforcement of such rates is controlled by the obligation resulting from the contract, and therefore the question of whether such rates are confiscatory becomes immaterial" (citing cases).

The citizens of Harrisonville contend that the order of the Commission is a violation of the terms of their contract and a confiscation of their property without compensation in contravention of the guarantees of the Federal Constitution. The agreed facts bring this case within the second proposition stated by the learned Chief Justice. This is a federal question, and that decision is controlling.

The company and the citizens of Harrisonville voluntarily entered into a contract fixing the rates to be paid by them for current to be furnished by the company at certain stipulated rates. Confiscation implies the taking of property against one's will without just compensation. Insistence upon the performance of a lawful contract voluntarily entered into cannot be viewed as confiscation. This case differs from State ex rel. v. Pub. Serv. Comm., 275 Mo. 201. In that case the State, representing the municipality, consented to change the stipulated rates.

In Pawhuska v. Pawhuska Oil Co., 250 U.S. 394, Mr. Justice VANDEVENTER quoted from New Orleans v. N.O. Water Works Co.,142 U.S. 79, as follows: "In this case the city has no more right to claim immunity for its contract with the Water Works Company, than it would have had if such contract had been made directly with the State. The State, having authorized such contract, might revoke or modify it at its pleasure."

The contract from which the company seeks to escape is not one entered into with the city of Harrisonville in its corporate capacity, as in State ex rel. City of Sedalia v. Pub. Serv. Comm., 275 Mo. 201, but is a private contract between the company and the citizens of Harrisonville for lighting their private residences and business houses, and is protected by our state and federal constitutions. It may be, as contended, that the company is not making its customary profits and will not be liable to declare its usual dividends unless the rates stipulated in the contract are increased, but, unfortunately, that is true in all lines of business. That fact, however, does not authorize the Public Service Commission to rewrite the private contract solemnly entered into between the contracting parties and insert therein terms not agreed to by the citizens of Harrisonville. I therefore respectfully dissent from the majority opinion.