People Ex Rel. N.Y. Queens Gas Co. v. . McCall

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The public service commissions are authorized by law "to order reasonable improvements and extensions of the works, wires, poles, lines, conduits, ducts and other reasonable devices, apparatus and property of gas corporations, electrical corporations and municipalities." (Pub. Serv. Comm. Law [Cons. Laws, ch. 48], § 66.)

Under the authority of this statute the public service commission for the first district made the order requiring the relator to extend its gas mains and services to meet the reasonable requirements of Douglaston and Douglas Manor.

In applying the provisions of this statute the court at the Appellate Division said: "We have no doubt that under this law the question remains for the court to determine upon the review of the determination of the Public Service Commission whether the extension ordered was a reasonable extension."

This statement of the law is quite likely to create a misapprehension as to the power of the court. The court has no power to substitute its own judgment of what is reasonable in place of the determination of the public service commission, and it can only annul the order of the commission for the violation of some rule of law.

The public service commissions were created by the legislature to perform very important functions in the community, namely, to regulate the great public service corporations of the state in the conduct of their business and compel those corporations adequately to discharge their duties to the public and not to exact therefor excessive charges. It was assumed perhaps by the legislature that the members of the public service commissions would acquire special knowledge of the matters intrusted to them by experience and study, and that when the plan of their creation was fully developed they would prove efficient instrumentalities for dealing with the complex problems presented by the activities of these great corporations. It was not intended that the courts should interfere with the commissions or review their determinations further than is necessary to keep them within the law and protect the constitutional rights of the corporations over which they were given control.

The law governing the commissions is well expressed by the Minnesota Supreme Court in State v. Great Northern Ry. Co. (153 N.W. Rep. 247). It is there said: "The order may be vacated as unreasonable if it is contrary to some provision of the federal or state constitution or laws, or if it is beyond the power granted to the commission, or if it is based on some mistake of law, or if there is no evidence to support it, or if, having regard to the interests of both the public and the carrier, it is so arbitrary as to be beyond the exercise of a reasonable discretion and judgment." (See, also, People ex rel.Town of Hempstead v. State Board of Tax Comrs., 214 N.Y. 594;People ex rel. Morrissey v. Waldo, 212 N.Y. 174.)

In Interstate Commerce Comm. v. Illinois Central R.R. Co. (215 U.S. 452, 470) the chief judge, after stating the power of the court, continued: "It is equally plain that such perennial powers lend no support whatever to the proposition that we may, under the guise of exerting judicial power, usurp merely administrative functions by setting aside a lawful administrative order upon our conception as to whether the administrative power has been wisely exercised. Power to make the order and not the mere expediency or wisdom of having made it, is the question."

The court at the Appellate Division did not, therefore, have the power to determine that the extension of the relator's gas mains and pipes ordered by the public service commission was unreasonable in the sense that it was an unwise or inexpedient order, but only that it was unreasonable if it was an unlawful, arbitrary or capricious exercise of power.

The relator argues in support of the power of the Appellate Division to review generally the reasonableness of the order of the public service commission that the necessary authority is given by the provision with regard to the writ of certiorari contained in section 2140 of the Code of Civil Procedure. That section reads as follows:

"§ 2140. The questions, involving the merits, to be determined by the court upon the hearing, are the following only:

"1. Whether the body or officer had jurisdiction of the subject-matter of the determination under review.

"2. Whether the authority, conferred upon the body or officer, in relation to that subject-matter, has been pursued in the mode required by law, in order to authorize it or him to make the determination.

"3. Whether in making the determination, any rule of law, affecting the rights of the parties thereto, has been violated, to the prejudice of the relator.

"4. Whether there was any competent proof of all the facts, necessary to be proved, in order to authorize the making of the determination.

"5. If there was such proof, whether there was, upon all the evidence, such a preponderance of proof, against the existence of any of those facts, that the verdict of a jury, affirming the existence thereof, rendered in an action in the Supreme Court, triable by a jury, would be set aside by the court, as against the weight of evidence."

I do not understand that this section of the Code extends the power of the court beyond the rules laid down in State v.Great Northern Ry. Co. and Interstate Com. Comm. v. IllinoisCentral R.R. Co. (supra).

It is urged that under the provisions of subdivision 5 of section 2140 the court may set aside the determination of the commission as against the weight of evidence, regarding it the same as the verdict of a jury.

The court had occasion to say in People ex rel. Smith v.Hoffman (166 N.Y. 462, 476) in construing section 2140 of the Code of Civil Procedure, as applied to the determination of the board of examination under the Military Code: "The review authorized does not substitute the judgment of the civil court for that of the military court upon the evidence or the merits, but inquires into jurisdiction of the subject-matter, the exercise of authority in relation to the subject-matter according to law, the violation of any rule of law to the prejudice of the relator and the like."

Of course, if the court at the Appellate Division had annulled the order of the public service commission and granted a rehearing in the exercise of discretion, its order would not be reviewable in this court (Barrett v. Third Ave. R.R. Co.,45 N.Y. 628), but that is not the case. The court sustained the writ of certiorari and finally annulled the order of the public service commission without granting a rehearing.

The question now is whether or not there was any evidence to show that the order of the public service commission was an unlawful and arbitrary exercise of power. (Acme Realty Co. v.Schinasi, 215 N.Y. 495; People ex rel. Manhattan Ry. Co. v.Barker, 165 N.Y. 305; Otten v. Manhattan Ry. Co., 150 N.Y. 395. )

There was no dispute as to the basic facts of the case. There was some variation in the estimates of the witnesses as to the cost of iron pipe and the expense of engineering supervision and like matters, but there was no real disagreement as to the cost of the extension of the relator's system of gas distribution, and the increase in revenue that the relator would probably receive therefrom.

The court at the Appellate Division in its opinion summed up the proof on the subject. The court said that the cost of the extension would be between $60,000 and $70,000, and that the increased return to the relator from the consumption of gas would be about $1,660 per year, which is only one-half of the interest at five per cent upon the extension.

This is very far from showing that the order of the public service commission was simply an arbitrary and capricious exercise of power. Indeed it was not asserted to be so by the court. The court in annulling the order claimed and exercised the right to review the action of the public service commission and pass generally upon its wisdom and expediency.

In Douglaston and the neighboring territory in the third ward of the borough of Queens covered by the relator's franchise, there are some 332 houses. The occupants of these houses can get no gas unless they are supplied by the relator. It is the duty of the relator to supply their needs if practicable. (Wisconsin, M. P.R.R. v. Jacobson, 179 U.S. 287; People ex rel. WoodhavenGas Light Co. v. Deehan, 153 N.Y. 528.) The cost of the extension is not the only matter for consideration. (Oregon R.R. N. Co. v. Fairchild, 224 U.S. 510, 529.)

The court at the Appellate Division substituted its own judgment for that of the public service commission in determining that the latter's order was unreasonable. This decision if allowed to stand will seriously hamper the commissions in the discharge of their duties, and go far toward defeating the efforts of the legislature to establish agencies to regulate the great public service corporations.

The order should, therefore, be reversed and the order of the public service commission reinstated, with costs in the Appellate Division and in this court.

WILLARD BARTLETT, Ch. J., CHASE, HOGAN, CARDOZO and POUND, JJ., concur; HISCOCK, J., not voting.

Order reversed, etc.