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continuing dissent from the Freeport Case, but on the contrary Justice Peckham refers to said case with seeming approval.
So, also, plaintiff's contention that the Broughton act contemplates the fixing of rates only by contract for the whole term of the franchise directly conflicts with the rule and authority above enunciated and cited, and is therefore without merit.
Plaintiff's argument that such regulation, as an exercise of legislative power, cannot be a municipal affair, because it works unlawful discrimination between competing corporations, and violates subdivision 19, § 25, art. 4, and section 21, art. 1, of the state Constitution, and that equal protection of the law as to rates can be had only when by general statutes they are made uniform throughout the state, is not well grounded. The local conditions of public utilities, such as value of plant, costs of maintenance and operation, etc., are so variant in different places, that rates, if reasonable, cannot be the same in all localities. From this consideration, it follows that municipalities should be allowed respectively to fix rates within their corporate limits, and it was to promote and apply this salutary doctrine to all matters of local concern that the provisions of section 8, art. 11, of the Constitution, authorizing freeholders' charters, were ordained as organic laws. Uniformity is the very thing these charters are designed to avoid, and dissimilarity their essential idea.
The Supreme Court of California on this subject has said:
"It may be true, that the freeholder charter scheme confers greater influence in legislative matters upon the inhabitants of the favored cities than is enjoyed by the people who do not reside in said cities. The inhabitants of the favored cities may participate in making laws for others which have no operation at all as to them, while the outsider, when the charter has been once made, has no voice in making such laws for those within the city even when he is vitally and directly interested in them; but if this be an inequality the people have themselves made it, and if a remedy is needed they alone can provide it." People v. Williamson, 135 Cal. 415, 67 Pac. 504.
Nor is there anything contrary to these views in section 6, art. 11, of the Constitution, for the simple reason that the regulation of the charges of a public service corporation within the limits of a city is a “municipal affair.” Streets of a city are public highways, in which the people of the whole state are interested, yet the opening and widening of streets are “municipal affairs." Byrne v. Drain, 127 Cal. 663, 60 Pac. 433. The regulation of telephone rates in a city would seem to be more clearly a matter of local concern than the control of streets. On this point plaintiff continues as follows:
“Our construction is reinforced by the consideration of other provisions of the same instrument. Section 33, art. 4, of the Constitution, provides : "The Legislature shall pass laws for the regulation and limitation of the charges for services performed and accommodation furnished by telegraph companies,
and where laws shall provide for the selection of any person or officer to regulate or limit such rates, no such person or officer shall be selected by any corporation or individual interested in the business to be regulated, and no person shall be selected who is an officer or stockholder in any such corporation. It is plain that by this provision it was not intended to regulate or limit the charges of telegraph companies except by general laws. State v. Mayor (Mont.) 85 Pac. 744.”
Plaintiff, through inadvertence, erroneously quotes the first clause of said section, which is as follows:
“The Legislature shall pass laws for the regulation and limitation of the charges for services performed and commodities furnished by telegraph and gas corporations,” etc. The omitted words "and gas corporations” are very significant.
If plaintiff's interpretation of the constitutional provision above quoted be correct, then gas corporations cannot be regulated or limited in their charges, except by general laws, whereas plaintiff shows that by section 19 of article 11 the fixing of gas rates is a municipal affair. Moreover, if there were no such constitutional provisions in reference to gas companies, it is manifest that the fixing of gas rates throughout the various cities of the state by a general law would be impracticable, and that it is a matter properly, if not necessarily, confided to the respective municipalities.
Plaintiff repeats its erroneous construction of said section as follows:
"Referring again to section 33 of article 4 of the Constitution of California above quoted, we desire to call the attention of the court to the fact that that section applies to telephone companies. The section refers only to telegraph companies, but telegraph companies and telephone companies stand upon the same footing, and the language used in constitutions and statutes referring to telegraph companies applies to and binds telephone companies. Joyce on Electric Law, $ 8; Davis v. Pacific States Telephone Company, 127 Cal. 315, 59 Pac. 698. The foregoing California decision on the subject necessarily settles the construction of the above section of the Constitution. It is plain, therefore, that the framers of the Constitution regarded the regulation of telephone and telegraph charges as not a municipal affair, but provided that the same should be done by general and uniform laws, and evidently contemplated that it should be done by some sort of a commission. It is plain that the fixing of telephone rates cannot be a municipal affair, while the above provision of the Constitution of the state of California is in force. It clearly and distinctly requires the Legislature to pass the laws, and we think it would be a violation of the plain provisions of that section of the Constitution for the Legislature to divest itself of this power by delegating it to a municipal corporation."
No one will claim that it was ever contemplated by the Constitution that gas rates should be regulated by a general law, or through the agency of a commission; and the truth is section 33 of article 4 above quoted does not contemplate the accomplishment of its purposes by a general law, or through commissions, but by suitable delegations of power to municipalities. I am clearly of opinion that the city of Los Angeles, when said ordinances were adopted, was authorized by its charter and the Constitution of the state to regulate charges for telephone service, and that the authority thus conferred upon the city was as ample as that possessed by the Legislature, and that this conclusion results, even though the grant of said authority be considered solely as a delegation from the Legislature. There are strong reasons, however, for a broader and more liberal construction of a freeholders charter than is usually given to a grant solely from the Legislature. The Supreme Court of the state has said:
“The power of cities under charters to raise money by taxation for municipal purposes does not find its source in any grant by the Legislature, but has been directly granted by the people of the state by the provisions of the Constitution.” Ex parte F. W. Braun, 141 Cal. 204, 74 Pac. 780; Security Savings,
etc., Co. v. Hinton, 97 Cal. 214, 32 Pac. 3; Ex parte Pfahler (Cal. Sup.) 88 Pac. 270; St. Louis v. Dorr, 145 Mo. 466, 41 S. W. 1094, 46 S. W. 976, 42 L. R. A. 686, 68 Am. St. Rep. 575; St. Louis v. Western U. Tel. Co., 149 U. S. 467, 13 Sup. Ct. 990, 37 L. Ed. 810.
The power acquired by a municipality under a freeholders' charter, so far as concerns its interpretation, is not unlike that conferred by section 11 of article 11 of the state Constitution upon municipal corporations to pass local police and sanitary regulations, and it has been repeatedly held that in the latter case the power is a direct grant from the people and not merely an authority delegated by the Legislature. Ex parte Roach, 104 Cal. 272, 37 Pac. 1044; Ex parte Lacey, 108 Cal. 326, 41 Pac. 411, 38 L. R. A. 640, 49 Am. St. Rep. 93; Denninger v. Recorder's Court, 145 Cal. 626, 79 Pac. 360; Odd Fellows Cam. Ass'n v. S. F., 140 Cal. 226, 73 Pac. 987. Such a charter being an organic act, and so declared by the Constitution, should not the powers of the city thereunder, like those of the Legislature of the state, be liberally interpreted? It is unnecessary, however, to pursue this line of thought further. Section 31 of the charter of the city of Los Angeles is so clear and unambiguous in conferring upon said city control of telephone rates that there is no occasion to invoke collateral aids to interpretation (McPherson v. Blacker, 146 U. S. 27, 13 Sup. Ct. 3, 36 L. Ed. 869), and therefore it is immaterial whether said charter be considered a grant by the Legislature or direct emanation from the people.
I am further of opinion that Ordinance C, requiring telephone companies to report to the city council value of plant, receipts, and expenditures, is an appropriate, if not necessary, means for carrying into effect the power of regulation conferred by section 31 of the charter, and therefore power to pass said ordinance is included in said power of regulation.
Plaintiff's claim that the power of regulation, if conferred, was given to the council as a commission representing the state, independent of the city, and that the council, as a commission, being without legislative power, could not lawfully pass Ordinance C, is untenable. Careful reading of all the sections of article 3 of the city charter satisfies me that the power to regulate rates conferred by section 31 of said article is given to the council not as a commission but as the legislative or governing body of the city. For instance, article 3 of the charter begins with the declaration, in section 12: “The legislative power of the city is vested in the council, subject to the power of veto and approval by the mayor as hereafter given and shall be exercised by ordinance; other action of the council may be by order upon motion.” Then, following in its order, is the provision in section 31 of said article, authorizing the council to regulate rates as follows: "The council shall have power by ordinance
to fix and determine charges for telephones and telephone service," etc. Reading these sections together, it seems to me that there is no room for controversy, but that the powers conferred by section 31 were given to the council as the legislative or governing body of the city, and not as a commission. This view is not only shown, however, by a careful perusal and comparison of the various sections of
said article of the charter, but is confirmed by the authority which plaintiff itself cites to the opposite contention, namely, Jacobs v. Supervisors, 100 Cal. 121-130, 34 Pac. 630, 633. At the latter page, the court says:
“At the time the section was adopted there was no city and county or city or town other than the city and county of San Francisco of which a board of supervisors was the legislative department, and it may well be presumed that the constitutional convention at that time had particularly in view the city and county of San Francisco when they expressly granted to the board of supervisors the power to establish water rates. But as there were some, and might in the future be other, cities and towns of whose government boards of supervisors did and might not constitute a part, and as other consolidated city and county governments could be established in the future whose legislative department might or might not be boards of supervisors, it was necessary, also, to provide for the fixing of water rates in those kinds of municipalities. And so the section, after declaring that water rates 'shall be fixed annually by the board of supervisors' (that is, of course, when such board was or should be a part of the government), proceeded to provide, also, that in municipalities having no boards of supervisors the other governing body' thereof should fix the rates. It is difficult to conceive how any other construction can be put upon the section without entirely eliminating therefrom the prominent and conspicuous words 'board of supervisors.'”
It follows, from the foregoing views, that Ordinances C and D are both valid, unless the power of regulation conferred by the local laws upon the city had been previously surrendered by contract, or is in contravention of some provision of the federal Constitution, and these two questions will be considered in the order in which they have been named.
2. I now come to the second question propounded in the outset of this opinion, namely, did the city of Los Angeles, by Ordinance B, surrender or suspend its power to regulate plaintiff's charges for telephone service?
The power to abandon or suspend its control of rates is not expressly given the city of Los Angeles either by its charter or the Broughton act. St. California, 1901, p. 267, c. 103. It is argued, however, by plaintiff, that in this age telephone systems are among the appropriate instrumentalities for providing and maintaining suitable fire and police departments, and otherwise promoting the efficient administration of municipal government, and therefore the power to contract for telephone rates is inferable from sections 17, 22, and 23 of said charter. It is also argued on behalf of plaintiff that this power to contract for rates is to be implied from the Broughton act, providing for the sale of franchises, on the ground that a sale implies a price. It may well be doubted, however, whether or not authority to provide and maintain suitable fire and police departments, or the more comprehensive authority to efficiently administer the municipal government, as conferred by the city charter, or whether or not the sale of franchises as authorized and provided for by the Broughton act, necessarily or reasonably include authority to surrender municipal control over rates. These
These provisions of the charter and the Broughton act are unlike the charter provision in Los Angeles City Water Co. v. Los Angeles (C. C.) 88 Fed. 720, from which the court inferred power to fix rates contractually. There the express provision of the charter
was that the city council “shall have the power
to provide for supplying the city with water."
It may be that whatever doubts arise on this question should, under the well recognized rule of construction hereinbefore referred to, be resolved against the claimed grant of power and favorably to its retention by the state. However, for the purposes of this hearing, it will be conceded, without further consideration or any decision of the question, that the city, when plaintiff's franchise was granted, had authority by contract to abridge or abandon its control of telephone rates, and it is therefore needless to inquire whether, in granting said franchise, it acted in a proprietary or legislative capacity, or derived its authority from charter provisions or general laws. It is important, however, to determine the character of the power to regulate rates, since this fixes the rule of construction applicable to cases where abandonment or suspension of the power is claimed.
The power of the state to regulate public utilities, including rates, cannot be otherwise than a power of legislation. Where this power has been admittedly conferred upon a city, and the city adopts a suitable ordinance, in execution of this power, such an ordinance is not in any sense a proprietary matter. I can see merit, if not convincing force, in the proposition that a city, when it enters into a contract for a public utility, even though municipal control of rates be thereby abridged or abandoned, acts in a proprietary character, but this proposition by no means takes away from the power thus abandoned its governmental or legislative character. This distinction seerns to be presented in the following quotation:
“The power to fix and to regulate the rates which the inhabitants of a city shall pay to business corporations for water, gas, transportation, and other public utilities partakes of the nature of a governmental power and also that of a business power. Are the inhabitants of a city paying rates not fixed by contract to quasi public corporations for public utilities? The power to so regulate these rates that they shall not be unreasonable is a legislative, a governmental power which the state or city may exercise, but may not renounce. Is a city without waterworks and hence without rates at which any one will furnish water therefrom to the municipality or its inhabitants? The making of a contract for the construction and operation of waterworks wherein the parties agree what rates may be collected by the owner of the works from private consumers during a reasonable term of years is the exercise of one of the business powers of the corporation. The purpose of such a contract is not to regulate rates, for there are no rates to regulate. Hence it is that the Legislature of a state, unless prohibited by its Constitution, may empower a city to suspend by contract, and a city may suspend in that way during a reasonable term of years, its power to change or regulate the rates which an individual or corporation may collect of private consumers.” Omaha Water Co. v. Omaha, 147 Fed. 1, 5, 77 C. C. A. 267, 271.
In a leading case on this subject it is said:
"When one becomes a member of society, he necessarily parts with some rights or privileges which, as an individual not affected by his relations to others, he might retain. 'A body politic,' as aptly defined in the preamble of the Constitution of Massachusetts, 'is a social compact by which the whole people covenants with each citizen, and each citizen with the whole people, that all shall be governed by certain laws for the common good.' This does not confer power upon the whole people to control rights which are purely and exclusively private (Thorpe v. R. & B. Railroad Co., 27 Vt. 143, 62 Am. Dec. 625); but it does authorize the establishment of laws requiring each citizen