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The court looked not merely to one or two of said facts, but was care
ful to say:
"Taking all the circumstances above referred to into account, the case before us clearly falls within the rule as to the binding character of agree ments respecting rates applied in Detroit v. Detroit Citizens' Street Railway Company, 184 U. S. 368, 22 Sup. Ct. 410, 46 L. Ed. 592, and approvingly referred to in Knoxville Water Co. v. Knoxville, 189 U. S. 434, 437, 23 Sup. Ct. 531, 47 L. Ed. 887."
Another difference of great importance between the Cleveland Case and the one at bar is that in the Cleveland Case the suspension of the power of regulation was for only 25 years. In the case at bar, the suspension, if held to exist, would be for the period of 50 years. Indeed, this distinction applies to all of the cases cited in this connection except the Freeport Case, where the existence of a contract for rates was denied, and it is worthy of note that plaintiff, in its brief, states that the period of suspension in the Freeport Case, 55 years, was an unreasonable time. It is also worthy of notice that in the Cleveland Case the court refers approvingly to the Knoxville Case, wherein, as I have already shown, it was held that the mere fixing of maximum rates did not displace the municipal power of regulation given by the general law, under which the water company was created. Furthermore, there is no provision in section 9 of Ordinance B as to when the maximum rates there prescribed shall terminate, or how long they shall last. This becomes more noticeable when we read in the same connection the first clause of section 11 of Ordinance B:
“That the person to whom this franchise is granted, or his assigns, shall, during the life of said franchise pay to the city of Los Angeles in lawful money of the United States two per cent. of the gross annual receipts of such grantee and his assigns, arising from the use, operation or possession of said franchise."
Thus, it will be seen that section 11 expressly provides that 2 per cent. of the gross annual receipts of the company shall be paid to the city “during the life of said franchise," whereas the provisions of section 9 as to rates are not fixed, as they were in the Cleveland Case, for a stated time.
It is true that the city by Ordinance B required plaintiff to furnish for the use of the city 30 telephones and 150 pairs of conductors, and to pay to the city 2 per cent. of its gross annual receipts, and these things were doubtless considered an adequate consideration for the franchise granted plaintiff to use the public streets and alleys for the construction and operation of plaintiff's telephone system; but I find no case which supports plaintiff's contention that such a consideration alone is sufficient to show that the city, besides granting the use of the public streets and alleys, intended also to contract as to rates, thus abandoning its control of plaintiff's charges for the unusual period of half a century.
A somewhat elaborate review of the cases, including those above cited, bearing upon the point, now under consideration, has been made by the Circuit Court of Appeals of the Eighth Circuit, in a case wherein the court, on grounds substantially the same as in the case of Detroit v. Detroit Citizens' Ry. Co., supra, held that there was a suspension of the power to regulate rates. Omaha Water Co. v. Omaha, 147 Fed. 1, 77 C. C. A. 267.
After much reflection upon the subject, and a careful review of the authorities, I can but conclude that the city of Los Angeles did not, by Ordinance B, abandon or suspend its power to regulate charges for telephone service.
3. My ruling, just announced, that there was no contract as to rates between the city and the plaintiff, disposes of the latter's contention that Ordinance D violates what is known as the impairment clause of the Constitution.
Plaintiff's kindred contention that said ordinance violates the fourteenth amendment seems to be rested on the ground that “equal protection of the laws,” within the meaning of said amendment, so far as rates are concerned, is afforded only where the rates are fixed uniformly throughout the state by general laws, and on the further ground that Ordinances D and E, which prescribe different rates for two companies, operating in said city, unlawfully discriminate against plaintiff, and that since Ordinance D makes no provision for notice, it would, if executed, deprive plaintiff of property without due process of law.
The first of these grounds has already been considered, the others will now receive attention.
A moment's reflection shows that the mere fact that different rates are prescribed for two companies does not, of itself, establish unlawful discrimination against either. Such discrimination can result from different rates only where the companies are identical as to those factors which determine just compensation, among them being value of plant, revenues, and expenditures. San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pac. 633, 38 L. R. A. 460, 62 Am. St. Rep. 261. These conditions are rarely, if ever, the same in any two companies, and it is obvious that a rate fair to one company might be very unfair to another. To obtain relief on said ground, it is not sufficient to allege discrimination in general terms, but the facts out of which the discrimination grows must be clearly and specifically shown.
Moreover, Ordinance C, whose validity I have already shown, was intended to place before the city council such information as would enable it to do full justice to the plaintiff in the matter of rates. In paragraph 14 of the bill of complaint it is expressly alleged that plaintiff has not complied and declines to comply with said ordinance. Thus it appears that plaintiff has intentionally refused to do that which the law expressly enjoins, namely, furnish the information required by said ordinance, and for the lack of which the unlawful discrimination, if any, presumably resulted. Plaintiff will not be heard to complain in equity of a condition of things brought about by its own willful omission of duty.
It should be remembered, in this connection, that the reasonableness or unreasonableness of the rates fixed by Ordinance D is not before the court, but the only question is whether or not the city had power to fix any rate. In order to raise the question of reasonableness, it would be incumbent upon the plaintiff to allege, as I have already indicated, the particular facts on which the claim of unreasonableness rests. Covington, etc., Turnpike Co. v. Sanford, 164 U. S. 578, 17 Sup. Ct. 198, 41 L. Ed. 560; Atlantic & Pacific R. R. Co. v. U. S. (D. C.) 76 Fed. 186; Redlands, etc., Water Co. v. Redlands, 121 Cal. 365, 53 Pac. 843; San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pac. 633, 38 L. R. A. 460, 62 Am. St. Rep. 261. As stated above, however, plaintiff's contention is not that the rates fixed by the city in Ordinance D are so low as to be oppressive, but that the maximum rate fixed in Ordinance B is unalterable for a period of 50 years.
The other ground on which plaintiff bases its claim of an infraction of the fourteenth amendment, namely, that the Ordinance D does not provide for notice, is equally untenable. Said ordinance, being, as I have already held, legislative in character, no notice of intention to pass or consider it was required. Moore v. Haddonfield, 62 N. J. Law, 386, 41 Atl. 946; Cleveland, C., C. & St. L. R. R. Co. v. St. Bernard, 19 Ohio Cir. Ct. R. 299, 10 O. C. D. 415. On this subject of notice the Supreme Court of California has said:
“Whether the fixing of rates by the council be called a legislative, a judicial, or an administrative act, it is certainly not an adversary judicial proceeding, such as, under the Constitution, will conclude private rights. It is a proceeding on the part of the government to which neither the water company nor the rate payers are parties, conducted without notice to them, and without any right on their part to effectually intervene." San Diego Water Co. v. San Diego, 118 Cal. 556, 50 Pac. 633, 38 L. R. A. 460, 62 Am. St. Rep. 261.
To the same effect is the case of Water Works v. San Francisco, 82 Cal. 286–315, 22 Pac. 910, 1046, 6 L. R. A. 756, 16 Am. St. Rep. 116.
The Supreme Court of the United States has also declared notice unnecessary, in the following language:
"Was the appellant entitled to formal notice as to the precise day upon which the water rates would be fixed by ordinance? We think not. The Constitution itself was notice of the fact that ordinances or resolutions fixing rates would be passed annually in the month of February in each year and would take effect on the 1st day of July thereafter. It was made by statute the duty of the appellee at least 30 days prior to the 15th day of January in each year to obtain from the appellant a detailed statement, showing the names of water rate payers, the amount paid by each during the preceding year, and ‘all revenues derived from all sources,' and the 'expenditures made for supplying water during said time. It was the right and duty of appellant in January of each year to make a detailed statement, under oath, showing every fact necessary to a proper conclusion as to the rates that should be allowed by ordinance. Act of March 7, 1881 (Laws 1881, p. 54, c. 52) $ 2, above cited. Provision was thus made for a hearing in an appropriate way. The defendant's board could not have refused to have duly considered it and given it proper weight in determining rates. If the state by its Constitution or laws had forbidden the city or its board to receive and consider any statement or showing made by the appellant touching the subject of rates, a different question would have arisen. But no such case is now presented. In Kentucky Railroad Tax Cases, 115 U. S. 321, 333, 6 Sup. Ct. 57, 61, 29 L. Ed. 414, it was said: “This return made by the corporation through its officers, is the state ment of its own case, in all the particulars that enter into the question of the value of its taxable property, and may be verified and fortified by such explanations and proofs as it may see fit to insert. It is laid by the Auditor of Public Accounts before the board of railroad commissioners, and constitutes the matter on which they are to act. They are required to meet for that purpose on the 1st day of September of each year at the office of the Auditor at the seat of government.
These meetings are public and not secret The time and place for holding them are fixed by law.'” San Diego Land Co. v. National City, 174 U. S. 739, 752, 19 Sup. Ct. 804, 809, 43 L. Ed. 1154.
A like ruling, based expressly upon this San Diego Case, was subsequently made in Freeport Water Company v. Freeport, 180 U. S. 587–600, 21 Sup. Ct. 493, 45 L. Ed. 679.
It should be remembered in this connection that Ordinance C provides that rates shall be fixed at a regular or special meeting of the city council, held during the month of February of each year, and makes it the duty of every person, firm, or corporation supplying telephone service to said city or its inhabitants to furnish to the city council in the month of January of each year written statements under oath of receipts, revenues, and expenditures during the year preceding the date of such statement, and also an inventory of all the works, lines, plant, and property owned or used by such person, firm, or corporation, necessary or convenient to carrying on its business, and showing the actual cost and present cash value of each item thereof. These provisions of said ordinance are substantially the same as the provisions of the Constitution and statute referred to in the quotation last above made, and bring the case at bar within the principles there enunciated.
The last three decisions, one by the Supreme Court of California and the other two by the Supreme Court of the United States, are determinative of the question of notice, and it is unnecessary to review in detail the numerous cases from other states referred to in plaintiff's brief. The California cases cited at page 13 of said brief, and that of Fallbrook Irrigation District v. Bradley, 164 U. S. 112, 17 Sup. Ct. 56, 41 L. Ed. 369, as well as Hagar v. Reclamation District, 111 U. S. 701, 4 Sup. Ct. 663, 28 L. Ed. 569, and other cases involving special taxes and assessments, are inapplicable here.
Chicago, etc., Ry. Co. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970, so far from holding that notice is necessary under the facts of the case at bar, impliedly indicates, that such notice is not required. In that case it was held that notice was necessary largely on the ground that the statute creating the commission made its action final and conclusive, so that the same could not in any way be reviewed by the courts. In the later case, above mentioned, San Diego Land Co. v. National City, 174 U. S. 739–748, 19 Sup. Ct. 804, 807, 43 L. Ed. 1154, the Supreme Court said:
"Upon the point just stated we are referred to the decision of this court in Chicago, Milwaukee, etc., Railway v. Minnesota, 134 U. S. 418, 452, 456, 457, 10 Sup. Ct. 462, 33 L. Ed. 970. That case involved the constitutionality of a statute of Minnesota empowering a commission to fix the rates of charges by railroad companies for the transportation of property. The Supreme Court of the state held that it was intended by the statute to make the action of the commission final and conclusive as to rates, and that the railroad companies were not at liberty, in any form or at any time, to question them as being illegal or unreasonable. This court said: “This being the construction of the statute by which we are bound in considering the present case, we are of opinion that, so construed, it conflicts with the Constitution of the United States in the particulars complained of by the railroad company.'
Observe that this court based its interpretation of the statute of Minnesota upon the construction given to it by the Supreme Court of that state. What this court said about the Minnesota statute can have no ap
plication to the present case, unless it be made to appear that the Constitution and laws of California invest the municipal authorities of that state with power to fix water rates arbitrarily, without investigation, and without permitting the corporations or persons affected thereby to make any showing as to rates to be exacted or to be heard at any time or in any way upon the subject. The contention of appellant is that such is the purpose and necessary effect of the Constitution of the state. We are not at liberty so to interpret that instrument.” San Diego Land Co. v. National City, 174 U. S. 739– 748, 19 Sup. Ct. 804, 808, 43 L. Ed. 1154.
In the case at bar, as held in San Diego Water Co. v. San Diego, supra, and San Diego Land Co. v. National City, supra, the action of the city council in fixing telephone rates is not final or conclusive, but open to judicial examination as to whether or not the rates so fixed are reasonable. This last case is fully in point, and holds, upon facts substantially similar to those in the case at bar that notice is unnecessary. The ruling made by me as to the power of the city over telephone rates and the construction of section 9 of Ordinance B sufficiently answer plaintiff's contention as to an estoppel.
My conclusions upon the whole case may be summarized as follows: The charter of the city of Los Angeles, at the time of the passage of the ordinances sought to be annulled, conferred upon said city power to regulate charges for telephone service, and said power was not surrendered or abridged by the grant of plaintiff's franchise, or otherwise, nor do said ordinances, or either of them, contravene any of the provisions of the Constitution of the United States.
The demurrer to the bill is accordingly sustained.
UNITED STATES v. BANISTER REALTY CO. et al.
(Circuit Court, E. D. New York. May 9, 1907.) 1. NAVIGABLE WATERS-NAVIGABLE WATERS OF THE UNITED STATES DEFINED.
The term "navigable waters of the United States” applies: First, to all waters capable of sustaining or being used for interstate or foreign commerce, covering every part of any body of water, tidal or otherwise, any portion of which is capable of such use; and, second, to all waters under the admiralty and maritime jurisdiction of the United States and over which the District Court of the United States can exercise its peculiar admiralty jurisdiction.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 37, Navigable Waters,
88 5–11.] 2. SAME-POWER OF CONGRESS OVER-CONSTITUTIONAL GRANT.
The power of Congress to legislate with respect to the navigable waters of the United States does not rest alone upon the constitutional provision giving it power to regulate interstate commerce, nor alone upon the provision extending the judicial power of the United States to all cases of admiralty or maritime jurisdiction, which vests Congress with power to legislate on all matters necessary to carry into execution such judicial power, but may be sustained under either or both provisions, and the various acts relating to obstructions to navigation are within such power where such navigation comes within the provisions of interstate or foreign commerce, or within the admiralty and maritime jurisdiction.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 37, Navigable Waters, $ 2.)