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Barnes Laundry Company v City of Pittsburgh et al.

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to dictate "a system of accounts

prescribe the accounts in which particular outlays and receipts shall be entered, charged or credited, * require that no expenditure shall be cha red to any operating acco nt that should be charged to capital account, or vice versa," but “shall at all times have access to all accounts” kept by such corporation, and “shall also have power to require the making and filing with it” of all reports, etc., when deemed necessary. Article 6, Section 6, p. 1422, deals with the subject of complaints to the commission, by municipalities and others.

We have called attention to every provision of the Act which relates to or, in any material aspect, mentions municipalities. The review thus made forces the conclusion that such corporations are neither within the term “public service companies," as used in the statute, nor are they embraced in its rate-making provisions; further that they are not subject at all to the jurisdiction of the Public Service Commission beyond the “limited extent" provided in the parts of the Act above quoted, as we shall show.

In the first place, since the title to the legislation in question not only indicates the statute is intended to regulate public service companies in a most comprehensive way, but also contains explicit notice that it controls municipal corporations, engaged or about to engage in the business of such companies, only "to a limited extent,” a construction that, for purposes beyond those expressed in the Act, classes municipal corporations as public service companies, or which treats them in any general sense as falling within that designation, would have the effect of so broadening the statute as to make its title actually misleading; and this predicament, ordinarily being sufficient in itself to nullify legislation, must be avoided, unless the interpretation that brings it about is inevitable, which is not so here. We make the last assertion because, while the statute declares the phrase "public service company" comprehends "water corporations," it also, in effect, stipulates the latter term shall "not include municipal corporations” or their regulation, even when rendering the same kind of service as the former class of companies, except as otherwise (to the “limited extent") provided in the Act. There being several provisions in the statute governing municipalities, which state the exact jurisdiction of the commission in those particular instances, but nothing whatever concerning its power to regulate the rates and charges of such (municipal) corporations (keeping in mind the rule that bodies like our Public Service Commission are purely creatures of statute, having the powers there named and no others, which prescribed powers are not to be extended by implication "beyond what may be necessary for their just and reasonable execution:" People v Willcox, 200 N. Y., 423, 431; State v Pub. Serv. Com'rs, 270 Mo., 429, 443; Kephart, J., in Lycoming, etc., Co. v Pub. Serv. Com’rs, 67 Pa. Superior Ct., 608, 611; Cincinnati v Pub. U. Com., 96 Ohio St., 270, 274), it cannot, by any proper rule of construction, be held that the present legislation controls municipal corporations beyond the limited extent therein expressly provided; and, as before noted, this does not explicitly include a right to regulate their public service rates, nor, when the Act is studied and understood as a whole, can such power be properly implied.

Wherever municipal corporations are referred to in the parts of the Act to which we have called attention, it will be noticed that, in each instance, the provision in question covers some concrete object to be accomplished with reference to such corporations, within the limited extent the statute is intended to apply to them. No express provision either for the supervision or control of municipal rate-making appears. The parts which deal with municipal corporations contain no reference to either rate-making or regulations, while those having to do with the latter subjects omit all mention of municipalities; and neither from the provisions we have noted nor

Barnes Laundry Company v City of Pittsburgh et al.

from those to which we have found no occasion to refer is there justification for the implication that the legislature intended the rate supervisory or regulative features of the statute to govern municipal corporations.

In short, there is not enough in all the provisions of the Act to justify a construction which would confer upon the Public Service Commission the right to regulate the service rates charged by a municipal water plant; on the other hand, there is much to be found therein which strongly evidences an intention that the statute shall not, in any such extended sense, apply to municipal corporations. For instance, all the numerous provisions as to supervisory control of the commission over the issue of bonds and other securities by those constructing or maintaining public service plants, are inappropriate to municipalities engaged in such work, and it is inconceivable there was legislative purpose that they should apply thereto; yet if we, on general principles, construe such corporations to be, for purposes of the Act, on a part with public service companies these provisions would apply in the same degree as those granting to the commission supervisory power over rates. In other words, if we go on the theory of evident intendment, there is just as much warrant for holding the one set of provisions applicable to municipal corporations as the other. Many additional instances of a like character might be noted, such as the provisions requiring the consent of the commission for either the chartering, or change in franchise, of a corporation controlled by the Act; those subjecting the officers of corporations exercising public service rights to criminal charges of misdemeanor for the violations of the statute, etc., etc., all of which are inappropriate to municipalities.

That the legislature did not, under any circumstances, intend municipal corporations to fall within the term “public service companies," in a general sense, is evident; for if such term were intended to comprehend municipalities, most of the special provisions relating to that class of corporations would be entirely unnecessary-particularly is this so as to the keeping of accounts, making reports, etc., which all public service companies are obliged to do under the general provisions of the statute. The Act probably intended such accounts to be kept and reports to be made by municipal corporations, in order that the commission might have the benefit of the information which they contain, in regulating public service companies operating in the saine neighborhood or under approximately like conditions, and in passing on future municipal applications of a character over which, by the express terms of the statute, that body is given jurisdiction. Furthermore, when the Act is read as a whole, it is plain that its provisions, requiring municipalities to obtain consent of the commission before purchasing, entering upon the construction of, or extending public service plants, probably were intended for the purpose of protecting public service companies which operate in territories sought to be accommodated by municipalities, and thus to prevent municipal plants being used to the injury of private ones previously established, whenever the latter are ample for the accommodation of the public.

In reaching the conclusion that the legislature did not purpose to subject municipal corporations, rendering the same character of service as public service companies, to like regulation with the latter, we have not overlooked our own authorities which hold that, when a city undertakes to supply water, it acts "not by virtue of any right of sovereignty, but exercises merely the functions of a private corporation," and must be so considered (see Com. v Casey, 231 Pa., 170, 178, and authorities there mentioned, together with cases holding a like principle, from this and other jurisdictions, cited by appellant); but those cases have naught to do with the con

Barnes Laundry Company v City of Pittsburgh et al.

struction of the present Act of Assembly or anything at all analogous thereto, and they are not controlling here.

The legislature, by the law we are now construing, in effect divides corporations doing public service (in the industrial sense in which that term is used in the Act) into two kinds, namely, (1) corporations other than municipal, and (2) municipal corporations; which (no matter how much, under other and different circumstances, our law makers might be prevented from compassing) they had the right to do to accomplish the purposes of this Act. When rendering the same character of service as public service companies, municipalities for many purposes must be considered and treated like private corporations (as shown by the Pennsylvania cases before cited); but, for purposes of supervision over their internal management (which the present Act repeatedly treats as necessarily involved in the control of rates), it can readily be seen they may justifiably be put on a different basis from ordinary public service companies; for, though engaged in rendering the same kind of service as the latter, and entitled to derive therefrom a just gain (Jolly v Monaca Boro., 216 Pa., 345, 348-9; Wagner v Rock Island City, 146 Ill., 139, 154; Farnham on Waters and Water Rights, Sec. 162, p. 855), municipalities are supposed to act primarily for the public good---not to earn dividends; moreover, they are financed along quite different lines from other corporations, and managed by popularly elected officers, who, as just said, are presumed to act for the public weal, and, when they fail to do so, may be turned out by their constituents at stated intervals. These consideration, with others which may readily be called to mind, account for and justify the omission of municipal corporations from the general application of our Public Service Company Act.

Albeit for most purposes the law will not tolerate a differentiation of corporations engaged in the same general character of service, yet, since the validity of legislative classification depends upon the existence-keeping in view the end to be accomplished-of real distinctions between the objects dealt with, when we consider the points already mentioned, always remembering the present Act is avowedly one to "regulate” public service companies and, only “to a limited extent,” municipal corporations, the classification under attack (notice of which is given in the title of the Act, supra) cannot be held to lack substantial, or reasonable, support; we are therefore without warrant to set it aside. The last statement is important because appellant, while admitting the probability that the legislature did not intend to regulate municipal rate-making, contends, nevertheless, that the classification in question offends our constitutional inhibition against special legislation and, since the Act contains a provision to the effect that if any particular part shall be declared unconstitutional such decision shall not affect other parts thereof, it further contends we should read the law as though the alleged unconstitutional parts--working the division of corporations into different classes were not contained therein, thus placing municipal corporations rendering the same kind of service as public service companies in a general class with the latter, and, by this method of construction, or elimination, subjecting the former to all the terms of the Act. This view was taken by the Supreme Court of Illinois in the Springfield Gas & Electric Co. v The City of Springfield, Vol. 15, No. 8, Rate Research, p. 1; but, in our opinion, for the reasons hereinbefore stated, the legislative classification objected to being permissible, the Illinois decision is not a proper guide to follow.

Our conclusion, that the "limited” application of the Public Service Company Act, referred to in its title, does not comprehend the right of the commission, thereby created, to regulate water rates charged by defend

Barnes Laundry Company v City of Pittsburgh et al.

ant municipality, necessitated "consideration of other, and quite different, jurisdictional questions; which we shall now discuss.

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III. The Act of June 15, 1915, P. L. 976, amending certain other acts, which govern the “levy, collection and disbursement of taxes and water rents” in cities of second class, declares, by Section 3, p. 978, that "the city shall have power to prescribe by ordinance

the terms and conditions upon which water will be supplied on a metered service" and authorizes the assessment of "water rents, or rates for the water consumed, at the rates fixed from time to time by ordinance." By Section 5, p. 981, city councils are empowered to create a board of water assessors, in the number and manner therein set forth; and it is provided that councils shall “annually levy and fix a schedule of water rents, or rates

at which water will be furnished by meter, and the conditions upon which the same shall be furnished, and shall have the right to require the use of meters upon such terms and conditions as may be prescribed by ordinance, either for specified classes of users, or in certain sections of the city, or generally throughout the city, and said board shall have the power and authority of assessing the water rents, or rates, in accordance therewith.” This fifth section also gives the board power to grant exonerations "upon such terms as may be prescribed by councils,” and it further provides that any person, who may feel aggrieved by an assessment, may, on or before the first day of February in each year, “appeal to the full board of water assessors, sitting as a board of revision, and demand a re-assessment.” On such appeal, the board is granted to examine witnesses, and "any owner who is dissatisfied with the final decision may, within thirty days, appeal therefrom to the Court of Common Pleas, which tribunal “shall proceed at its earliest convenience to hear such appeal and to make such order and decree touching the matter complained of as may seem just and equitable." An appeal is given from the Common Pleas to the Supreme or Superior Court, and it is declared that "no appeals taken from such assessment shall prevent the collection of the water rents, or rates, complained of, but in case the same shall be reduced, then the excess or overpayment shall be returned to the person who shall have paid the same.”

In 1915 and prior thereto water rents in the City of Pittsburgh were charged at a "fat" rate; but thereafter, pursuant to a general ordinance upon the subject, enacted in 1914, they were assessed against plaintiff and others on a “meter" basis.

Plaintiff's bill complains of the charges against it for 1916, 1917 and part of 1918, this suit having been commenced in June of the last named year. The assessments in question were made in accordance with ordinances passed in the several years mentioned, designating meter rates for "laundries" and other industrial and domestic users of water throughout the City of Pittsburgh. These ordinances authorize the board to make exonerations only in cases where properties have become vacant or when fixtures are removed and the use of water discontinued, which provisions have no reference to the facts in the present case.

The Act of 1915 stipulates that appeals to the “full board of water assessors sitting as a board of revision” are to be made "on or before the first day of February in each year;" and, as we understand the situation, under the law meters are read quarterly beginning with April. April being subsequent to February, this arrangement would appear to render the statutory appeal thus provided for nugatory, so far as the present appellant and other users of water meters are concerned. We need not, and do not, decide that point, however, for the sole right which the Act gives on such

Barnes Lalindry Company v City of Pittsburgh et al.

an appeal to persons "aggrieved by any assessment" is to "demand a reassessment,” and, since the board have only “the power and authority of assessing" in accordance with the “schedule of water rates” prescribed by Council, the former could do no more, on revision, than correct its own administrative errors--of law, in interpreting, or of fact, in carrying out, its chart of powers; it, like other administrative officers (Cheltem Tr. Co. v Blankenburg, 241 Pa., 394, 397), being. bound by all relevant city ordinances until they are either abrogated by council or duly set aside by the courts. In other words, even on appeal, the board of water assessors would have no authority to inquire into the reasonableness or justice of either the rate or classification ordained by council; and the alleged unreasonableness and discriminatory character of these are the real grounds of complaint in this case.

Although the courts are given jurisdiction on appeal to make "such order and decree touching the matter complained of as may seem just and equitable” (Act 1915, supra), this warrant of authority is necessarily limited to a revision of those matters which may be legally “complained of” to the full board of water assessors, i. e., errors in assessments which that body has power to redress, by reduction or otherwise. We conclude the Act of 1915 does not afford a remedy at law to the present plaintiff.

The matters determined thus far bring us to the question of equity jurisdiction; for alleged lack of which, among other stated reasons, the court below dismissed plaintiff's bill.

IV.

The Act of June 16, 1836, P. L. 1835-6, 785, 790, Section 13, provides that the several courts of Common Pleas shall have chancery powers to prevent or restrain "the commission or continuance of acts contrary to law and prejudicial to the interests of the community and the rights of individuals;" this broad grant of equity jurisdiction is sufficient to cover cases like the one now before us, where plaintiff complains that defendant city has unlawfully arrogated to itself the right to make and enforce unreasonable and discriminatory water rates to the prejudice of the former.

While, necessarily, a wide range of discretion is allowed municipal authorities in fixing public service rates (Rieker v Lancaster City, 7 Pa. Sus perior Ct., 149, 156, paragraph 2, 157, part of last paragraph; Cook Co. v Chicago, 103 Ill., 646, 650; Preston v Water Com’rs, 117 Mich., 589, 598), and classification of users is permitted (Act of 1915, supra; Rieker v Lancaster, supra, 156; Fretz v Edmund City, 168 Pac., 800, 802; Preston v Water Com’rs, supra), yet a city operating a legalized monopoly, in the nature of a water plant, cannot give undue or unreasonable preference or advantage to, or make unfair discrimination among, customers, any more than a private corporation similarly situated (3 Dillon Municipal Corporations -5th ed.-Sec. 1317, p. 2204; Chicago v N. W. M. L. Ins. Co., 218 Ill., 40, 43; Red Star S. S. Co. v Jersey City, 45 N. J. L., 246, 250; Wagner v Rock Island City, 146 111., 139; Fretz v Edmond City, supra; as to reasonableness of rates. see also Jolly v Monaca Boro.. 216 Pa.. 345, 350), nor is it to be assumed that an Act of Assembly intends indirectly to confer such legally discountenanced power; yet, this, in effect, is what defendant municipality claims for the Act of 1915, supra.

"It is not competent for the State to enact that the rates (for public utilities), fixed either by the legislature or by a commission or municipality

are conclusive *; for such an Act would be unconstitutional, because it denies to the party affected due process of law, and, by depriving it of the lawful use of its property, it in substance and effect deprives it of

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