(108 A.)

plied reservation of the right of the stater * the commission shall establish lawfully to exercise its police power for the other regulations. This language is not ungeneral welfare," citing numerous cases. certain. It does not leave the reader's mind Nor has the state ratified the doing of what to fluctuate between two meanings. It clearwas not at first authorized. Upon the water ly is of broad application. It comprises "the district it enjoined that, if organized, it management of all public utilities," and "any should become responsible for the perform-rates, ance of contracts valid against the company when the district charter was granted. the district has not been organized, it is unnecessary to inquire whether there were or not any contracts good in law.

As

be

or charges

*found to

* unjust, unreasonable, insufficient, or unjustly discriminatory."

"Nor shall the furnishing by any public utility of any product or service at the rates and upon terms and conditions provided for in any contract in existence January first, nineteen hundred thirteen be construed as constituting a discrimination, or undue or unreasonable preference, or advantage within the meaning specified."

[14] It is our decision that, subject to review on questions of law, the Public Utilities Commission has authority, inclusive of both [13] Thus far we have considered the case quasi legislative and quasi judicial power, to from the viewpoint of a direct act of the Leg-fix rates and charges for all public utility islature. There was no such act. In 1913, services. In 1913, services. This determination is not repugthe Legislature created the Public Utilities nant to the proviso of section 34 of the UtiliCommission. That commission, with powers ties Act, reading: of great scope and amplitude, and also with great responsibilities, partially changed the Guilford contract. Shall the legislation that called the commission into existence be construed as effective both retroactively and prospectively? That a statute shall not have retrospective operation unless its terms are so strong, clear, and imperative that no other meaning can be annexed to them, or unless the intention of the Legislature cannot be otherwise satisfied, is settled in an unbroken line of this court's decisions, so familiar they need not be be cited. "Every public utility," to repeat from the statute now under consideration, "is required to furnish safe, reasonable and adequate facilities." R. S. c. 55, § 16. About this positive expression of the public will, all the other legislative declarations collect together, "The rate, toll or charge * shall be reasonable and just, taking into due consideration the fair value of all its property with a

fair return thereon.

*

not involved in this case. The question here [15] But interpretation of that clause is presented is, not whether there shall be discrimination concerning first faucet rates in Guilford, but whether all such rates uniformly shall be increased, the contract notwithstanding. As to this, the proviso certainly is without application.

[16] With reference to the supply of water

for the Sangerville Company, the unjust discrimination clause of the statute is of consequence. The Guilford Company, though it came into being solely to furnish water in

Guilford, at once proceeded to provide water for the Sangerville Company. The existing arrangement between the two corporations When the state authorized these companies never has enjoyed the approval of the state. to contract, it said they could do so "according to the terms and conditions set out in the charter of the Guilford water district." Priv. & Sp. Laws 1911, c. 249. Those terms and conditions are:

"Every unjust or unreasonable charge for such service is hereby prohibited and declared unlawful." Id. "The commission shall have authority to inquire into the management * of all public utilities" (section 4) to "fix a reasonable value upon all the property of any public utility * *whenever it deems a valuation thereof to be necessary for the fixing of fair and reasonable rates" (section 36); if any "rates, tolls, charges, schedules or joint rates shall be found to be unjust, unreasonable, insufficient or unjustly discriminatory, or otherwise in violation of the provisions of this chapter, the commission shall have power to fix and order substituted therefor such rate or rates, tolls, charges or schedules as shall be just or reasonable" (section 46). To what end is the commission clothed with authority to inquire into the management of all public utilities? To see to it that safe, reasonable, and adequate facilities are furnished at fair and reasonable The rental of the Sangerville Company is rates. New rates may be substituted for not so based. But it ought to be. The Guilold; for, reads the statute, "if any rates ford may not rightfully supply the Sangershall be found to be unjust, unreasonable, ville Company on any other than the statuinsufficient or unjustly discriminatory, tory terms. It is the duty of the Public Util

"The terms of said contract shall be based upon the expense incurred at Bennett Pond from which said water is taken and the expense in laying the main pipe from said pond to the the cost of maintenance of the works at the standpipe, the expense of the standpipe and pond, the main line and said standpipe. Of all this expense, said Sangerville Water Supply Company in its rental is to pay its proportional part with the Guilford Water District based on the number of faucets and hydrants in each town." Priv. & Sp. Laws 1911, c. 201.

ities Commission to see to it that the stat-16. CONSTITUTIONAL LAW 92-CONTROL OF ute is observed. VESTED RIGHTS WHEN NECESSARY TO PUBLIC HEALTH, MORALS, OR SAFETY..

In re SEARSPORT WATER CO. In re LINCOLN WATER CO. (Supreme Judicial Court of Maine. Dec. 9, supply of water to a municipality in which the rates are fixed for the public service rendered are valid and binding between the parties.

1. CORPORATIONS 391-CONTROL OF RATES 9. CORPORATIONS 391-CONSTRUCTION OF WITHIN STATE POLICE POWER.

When one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to and be controlled by the public for the common good to the extent of the inter-pairment

[Ed. Note.-For other definitions, see Words 4. CORPORATIONS 391 - REGULATION REGULATION OF and Phrases, First and Second Series, Impair

(108 A.)

sion, which can investigate conditions, hear par- | 21. PUBLIC SERVICE COMMISSIONS 7-DELties, and grant relief much more expeditiously EGATION OF STATE POLICE POWER. and fairly than the Legislature itself. 14. PUBLIC SERVICE COMMISSIONS 7 STATUTE PROHIBITING UNREASONABLE RATES NOT AFFECTING EXISTING CONTRACTS.

WILSON, J. Under special acts of the Legislature, the Searsport Water Company and the Lincoln Water Company were organized to supply the respective towns of Searsport and Lincoln with "water for domestic, sanitary and municipal purposes," 18. CONSTITUTIONAL LAW 117 - DELEGA- each company being expressly authorized to ·TION OF POLICE POWER ΤΟ SUBORDINATE enter into a contract with the town in which BODIES OR COMMISSIONS NOT AFFECTING EX-it was located to supply it with water for municipal or public uses.

Legislation vesting the police power in subordinate bodies or commissions does not create any new obligations or duties, or impose any new disabilities with reference to past transac-doubt of the authority of each company to contract with any corporation or individual in the town in which it was located to supply 19. PUBLIC SERVICE COMMISSIONS 2-OP- water for domestic, sanitary, or industrial

20. PUBLIC SERVICE COMMISSIONS 7-EX- be supplied to them.

EMPTION OF RATES FOR PUBLIC UTILITIES
FROM REGULATORY STATUTES.

No rates for public utility, however fixed, to a contract with the Searsport Water Comare exempted from the general regulatory pow-pany, and in 1911 the town of Lincoln enterers of the state contained within Rev. St. c. ed into a contract with the Lincoln Water 55, relating to rates for public utilities, unless Company, whereby the respective water comexcepted in express terms or by necessary im- panies were to construct reservoirs, lay plication. mains, and furnish to the town water for

For other cases see same topic and KEY-NUMEER in all Key-Numbered Digests and Indexes

municipal and fire purposes for a stipulated [concern the public, and the public interest sum per annum, and also to furnish to the inhabitants of the town water for domestic and sanitary purposes at a fixed rate or price.

ceasing to exist, the state's control under its police powers ceases; (2) that when the public health, safety, or morals are not involved, the state may authorize a municipality to Both contracts were still in force in 1918, enter into an inviolable contract fixing the when each water company filed a new sched- rates for service for a term of years with ule of rates both municipal and private with any public utility, and that the contracts in the Public Utilities Commission under chap- the instant cases are of that nature; (3) that ter 55, R. S., known as the Public Utilities the supplying of water to a municipality and Law, by which schedules the rates of each its inhabitants is a proprietary matter, and water company both for public and private any contract by the municipality relating service were increased over those fixed in thereto is protected against impairment by the contracts with the respective towns. the state and federal Constitutions; (4) and Complaints were filed with the Public Utili- that finally, irrespective of the power of conties Commission by each town and certain trol vested in the state, the Legislature did of its inhabitants against the increased rates. not under chapter 55, R. S., delegate to the A hearing was held. The commission adjudged Public Utilities Commission the authority to the rates both for public and private service regulate rates established by a contract enas fixed in the respective contracts to be "un-tered into prior to its enactment. just, unreasonable, and unjustly discrimina- The questions raised here are not new and tory,' ," and ruled as a matter of law that it had authority to change the rates even though fixed by contract, and found the rates for private service as fixed in the new schedules of each company to be just and reasonable, but fixed lower rates for the public service in each case than those set forth in the respective schedules filed, though in excess of the rates stipulated in the contracts.

To the ruling of the commission that it had authority to order new rates substituted for those contained in the contracts, each town and certain of its inhabitants as users of the private service excepted. Both cases come before this court on the exceptions. As the same questions are involved in each case and they were argued together, they are considered in one opinion by this court.

While this court in the recent case of In re Guilford Water Co., 118 Me. 367, 108 Atl. 446, laid down certain principles that are, we think, decisive of the issues in the instant cases so far as the rates for the private service are concerned, contentions not raised in that case have been urged by counsel in the cases now at bar, which require a restatement of the principles we deem controlling in this class of cases. In the cases now before us, a valid contract for public uses entered into by legislative authority existed between each town and the utility supplying it, which did not exist in the Guilford Case, and which presents questions that require full consideration.

The complainants here contend: (1) That although contracts harmful to the public health, safety, or morals may be subject to regulation at all times under the police powers of the state, the evidence in these cases disclosed that the contracts in question were innocuous so far as the public health or safety is concerned, and that, inasmuch as the changes in rates authorized by the Utilities Commission only affected the amount of the

have in some form been many times considered by both state and federal courts, and more recently of necessity by Public Service Commissions in the different states. The decisions taken as a whole, however, cannot be said to have contributed to clarity, but rather to obscurity of view as to the nature and scope of the police powers, particularly in their application to the regulation of rates where contracts fixing them have been entered into under legislative authority.

In a recent case before it, Clifton Forge v. Virginia Western Power Co., P. U. R. 1918F, 791, 803, the Corporation Commission of Virginia commented on the seeming inconsistencies in the conclusions of some of the decided cases in the federal Supreme Court, citing Cleveland v. Cleveland City Ry. Co., 194 U. S. 517, 24 Sup. Ct. 756, 48 L. Ed. 1102, and Home Tel. & Tel. Co. v. Los Angeles, 211 U. S. 265, 29 Sup. Ct. 50, 53 L. Ed. 176, and of which Freeport Water Co. v. Freeport City, 180 U. S. 587, 21 Sup. Ct. 493, 45 L. Ed. 679, and Vicksburg v. Vicksburg Water Works Co., 206 U. S. 496, 27 Sup. Ct. 762, 51 L. Ed. 1155, are, perhaps even more conspicuous examples.

An analysis of these and the many other decisions in the federal and state courts in which these questions have been considered discloses that many of the seeming inconsistencies are more apparent than real, and in the federal court at least are the result of having followed the construction by the state courts of the statutes involved. See Home Tel. & Tel. Co. v. Los Angeles, supra, 211 U. S. 277, 29 Sup. Ct. 50, 53 L. Ed. 176; Milwaukee Ry. Co. v. Wisconsin R. R. Com., 238 U. S. 174, 182, 35 Sup. Ct. 820, 59 L. Ed. 1254. However, neither the conclusions nor the reasoning can be said to be harmonious in all the decisions.

[1, 2] Certain principles are no longer questioned. The control or regulation of rates by public utilities is a legislative or govern

(108 A.)

So long as the

of the police powers of the state. Munn v. [ be maintained on this basis
Illinois, 94 U. S. 113, 24 L. Ed. 77; Minnesota
Rate Cases, 230 U. S. 352, 413-415, 433, 33
Sup. Ct. 729, 57 L. Ed. 1511, 48 L. R. A.
(N. S.) 1151, Ann. Cas. 1916A, 18; Kennebec
Water Dist. v. Waterville, 97 Me. 185, 201,
54 Atl. 6, 60 L. R. A. 856. Where the public
health, safety, or morals are concerned, the
power of the state to control under its police
powers is supreme and cannot be bargained
or granted away by the Legislature. The ex-
ercise of the police power in such cases vio-
lates no constitutional guaranty against the
impairment of yested rights or contracts.
Fertilizing Co. v. Hyde Park, 97 U. S. 659,
24 L. Ed. 1036; Butchers' Union Co. v. Cres-
cent City Co., 111 U. S. 746, 751, 4 Sup. Ct.
652, 28 L. Ed. 585; New Orleans Gas Co.
v. Louisiana Light Co., 115 U. S. 650, 672, 6
Sup. Ct. 252, 29 L. Ed. 516. New Orleans
Water Works v. Rivers, 115 U. S. 674, 6
Sup. Ct. 273, 29 L. Ed. 525; Walla Walla v.
Walla Walla Water Co., 172 U. S. 1, 15, 19
Sup. Ct. 77, 43 L. Ed. 341; Atlantic Coast
Line R. R. Co. v. Goldsboro, 232 U. S. 548,
34 Sup. Ct. 364, 58 L. Ed. 721; Dirken v.
Great Northern Paper Co., 110 Me. 374, 388,
86 Atl. 320, Ann. Cas. 1914D, 396; State v.
Mayo, 106 Me. 66, 75 Atl. 295, 26 L. R. A.
(N. S.) 502, 20 Ann. Cas. 512.

property is devoted to the public use, the
state may control the rates at all times, as
well when they are unfair to the utility be-
cause of failure to produce a "fair return,"
as when they are unfair to the public be-
cause too high. Winfield v. Public Service
Com. (Ind.) 118 N. E. 531, P. U. R. 1918B,
747, 752; Collingswood v. Collingswood, 91
N. J. Law, 20, 102 Atl. 901, P. U. R. 1918C,
261, 268. The whole theory of rate regula-
tion by the state is based on these principles.

Thus far we have considered the general powers of the state where no contract fixing the rates exists. In what respect may these powers be controlled by contracts between municipalities or the individual consumer and the utility?

[3] The power to regulate the rates of public utilities, however, is not dependent on the immediate concern of the public health or safety therein.

"When one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use and must submit to be controlled by the public for the common good to the extent of the interest he has created." Munn v. Illinois, supra, 94 U. S. 126, 24 L. Ed. 77; Union Dry Goods Co. v. Ga. Pub. Ser. Corp., 248 U. S. 372, 375, 39 Sup. Ct. 117, 63 L. Ed. 309; Woodburn v. Pub. Ser. Com., 82 Or. 114, 120, 161 Pac. 391, L. R. A. 1917C, 98, Ann. Cas. 1917E, 996; Boston & Maine R. R. Co. v. County Commissioners, 79 Me. 386, 10 Atl. 113.

[4, 5] The state requires every public utility to "furnish safe, reasonable and adequate facilities," and its rates and charges to be reasonable and just, based upon a fair return on the fair value of the property devoted to the public use. Section 16, c. 55. Its power to do so cannot be questioned. To assume that a Public Utilities Commission will in any case order the rates of a utility increased upon the sole consideration of increasing the returns of stockholders appears to us like begging the question. The public interest does not cease at the point where the rates insure merely the operating expenses of the company and begin again when they result in more than a "fair return" or exceed the value of the service rendered. The continued existence of the utility and the performance of its public obligations cannot

[6] Where the public health, morals, or safety is involved, the power to control vested rights, whether obtained by contract or otherwise, must prevail. All must yield in these respects to the common welfare. Fertilizing Co. v. Hyde Park, 97 U. S. 659, 24 L. Ed. 1036; New Orleans Gas Co. v. Louisiana Light Co., 115 U. S. 650, 6 Sup. Ct. 252, 29 L. Ed. 516; Walla Walla v. Walla Walla Water Co., 172 U. S. 1, 15, 19 Sup. Ct. 77, 43 L. Ed. 341.

The Utilities Commission, however, having based its orders in these cases upon the fact that the rates fixed by the contracts with the respective towns were unjust and unreasonable, and not having found that the public health or safety was jeopardized, the supreme necessity for the exercise of the police powers does not appear to exist. We must therefore inquire into that broader field of police powers, outlined in B. & M. R. R. v. County Commissioners, 79 Me. 386, 395, 10 Atl. 113, beyond the immediate concern of the public health, morals, or safety, and determine under what conditions, if any, contracts may preclude the state from the full exercise of its powers of rate regulation.

It is frequently laid down in the books that the exercise of the police powers is a governmental function, continuing in its existence, and cannot be granted or bargained away. Stone v. Mississippi, 101 U. S. 814, 817, 25 L. Ed. 1079; Texas & No. R. R. Co. v. Miller, 221 U. S. 408, 31 Sup. Ct. 534, 55 L. Ed. 789; Atlantic Coast Line R. R. Co. v. Goldsboro, 232 U. S. 548, 34 Sup. Ct. 364, 58 L. Ed. 721; Dirken v. Great Northern Paper Co., 110 Me. 374, 388, 86 Atl. 320, Ann. Cas. 1914D, 396. The power of rate making being recognized as an exercise of the police powers and a legislative or governmental function we might in all cases, on principle, expect it to remain vested in the state. This we apprehend has been the view of some of the state courts. Danville v. Danville Water Co., 178 Ill. 299, 53 N. E. 118, 69 Am. St. Rep. 304; Yeatman v. Towers, 126 Md. 513, 95 Atl. 158.