Citizens' Passenger Railway Co. v. Public Service Commission

75 Pa. Super. 238, 1920 Pa. Super. LEXIS 259

• Court: Superior Court of Pennsylvania
• Decided: December 10, 1920
• Docket: Appeals, Nos. 252 to 273
• Status: Published

Opinions

Opinion by

Head, J.,

In September, 1919, a number of citizens of Philadelphia, who had associated themselves under the name Cliveden Improvement Association, filed with the Public Service Commission a complaint against the Philadelphia Rapid Transit Company. The substance of this complaint was that the transit company, in possession of all of the property in the City of Philadelphia devoted to the service of the transportation of passengers, was seeking to have its rates of fare increased, when such increase was not necessary. It desired the Public Service Commission to prescribe a five-cent fare, with universal free transfers in all sections of the city, etc. Further that an order should be made directing the respondent-operating company to set aside a certain sum annually for the proper maintenance or renewal of the facilities of the company, necessary to enable it to render adequate public service. Still further, that the company be ordered to expend the sum of one million dollars yearly on extensions, until all portions of the city could receive what was considered adequate public service. An answer was filed by the operating company and a replication thereto in which the complainant asked and obtained leave to withdraw certain paragraphs of its original complaint.

In February, 1920, another association of citizens under the name of the United Business Men’s Association presented a brief petition for leave to intervene in the proceeding already recited. Leave having been granted, the intervener filed a new complaint, the substance of which may be thus stated. It alleged the apparent inability of the respondent-operating company to rendér adequate service at reasonable rates resulted from the fact that it was but the lessee of most of the property it operated and that by reason of the terms of the underlying leases, through which it obtained possession and control of the property dedicated to the public service, it was compelled to pay exorbitant rentals to the underlying companies, who were the real owners of the property. The prayers of this complaint were that the commission should inquire into the fairness of the terms of these agreements or leases, and, if necessary, to reduce the rentals therein provided for, to such an extent that each of the owners of the underlying properties, which had years ago been gathered together and welded into a single property, should receive only a fair return and no more, without regard to the obligations of the contracts of lease as they were originally made by the parties legally authorized to make them.

From the exhibits attached to the complaint and from the record generally, we learn there were thirty distinct and separate owners of the property, which as a whole is now operated by the Philadelphia Rapid Transit Company. This complaint by the intervener resulted in a summons from the Public Service Commission requiring these thirty separate corporations, not theretofore parties to the proceeding, to appear and answer the complaint. They did appear and filed an answer in the nature of a demurrer, challenging the right and power of the Public Service Commission to make any such order as was prayed for by the complainant, and asking that as to them the complaint should be dismissed. The Public Service Commission in July, 1920, filed an order overruling the demurrers, directing the respondents to file answers to the complaint within ten days and fixing a time for a hearing when the commission would proceed to investigate and consider all matters put in issue by the complaint and the answers. From that order of the commission, twenty-one of the corporations affected thereby took an appeal to this court, and an order of supersedeas maintained the status until the appeals could be considered and disposed of. When they came on to be heard on a single set of paper-books — as the questions involved in each appeal were identical — a motion was made at bar to quash all of these appeals on the ground that the order of the commission complained of was not a final order and therefore furnished no foundation upon which the appeals could rest. The motion was seriously pressed by counsel for the commission and the intervening appellee on the ground that the question had been ruled by the Supreme Court in disposing of the appeal from the judgment of this court in the case of Franke v. Johnstown Fuel Supply Company, 70 Pa. Superior Ct. 446. It becomes necessary, therefore, at the outstart to consider and dispose of these motions. A similar motion on the same ground had been urged upon this court at the argument of the case just cited. In denying the motion the opinion of our brother Henderson clearly pointed out that the language of section 17, of article VI, of the Public Service Law expressly authorized “Any party to the proceedings affected by the filing of any finding or determination by the commission, might appeal, originally to the Court of Common Pleas of Dauphin County, now to the Superior Court.” Considering that section alone, nothing could be added to the reasoning of the opinion cited to show that the words of the statute clearly authorized an appeal from such an order as that of which the appellants now complain. We think, however, the force of the reasoning of. the opinion will be increased by some other considerations to which we shall now advert. The statute furnishes intrinsic evidence it was drawn with skill and care, after a study of the Public Service Laws of other states, that had been enacted prior to 1913. When we turn to section 30 of the same article VI, it becomes quite apparent the draftsman of the act was not oblivious of the difference between the expressions “any finding or determination by the commission,” which furnished the foundation for an appeal from the commission to a court of law; and the further provision for an appeal to the Supreme Court from any “final judgment, order or decree” of that court of law. If we keep in mind that the Public Service Commission is an administrative body, invested with great power for the protection of the public in supervising and controlling the service, the rates, etc., of public service companies; and that the performance of its duties and the proper execution of its powers may frequently invite and demand investigations that will necessarily consume long periods of time, we can readily understand why the legislature allowed an appeal to a court of law from any order or decree of that body, so that if the order indicated its investigation would be conducted along lines that would probably, if not necessarily, lead it to conclusions that could not thereafter be sustained upon appeal to a court of law, the mistake might be speedily corrected.

If then we confine our attention to the language of the statute, the right of appeal to this court from the order complained of would seem to be undeniable. A glance at the nature and probable effect of the order in question must strengthen the conclusion that we have before us an appealable order. Some two or more years ago, a large number of complaints was filed before the commission by the City of Pittsburgh, and by citizens and boroughs of Allegheny County against the Pittsburgh Railways Company, an operating company; against the Philadelphia company, the owner of the stock of the operating company, but not itself engaged in the business of transportation, and against a number of underlying companies in like situation, the owners of smaller street railway properties, the possession and control of which, by virtue of leases or other agreements, had passed to and become vested in the operating company, the Pittsburgh Railways Company. The commission, having brought in all of the parties named, as they here seek to do, proceeded to an investigation which it declared in its report involved eighteen months of time, the taking of “several thousand typewritten pages” of testimony and the reports “of corps of experts and assistants.” To what end? Let the report speak: “The Philadelphia Company on July 19, 1917, filed an answer admitting that it was a holding company owning the entire capital stock of the Pittsburgh Railways Company and a part of the capital stock and other securities of other companies which were named as respondents; but it denied that it was engaged in the street railway service, or that it was subject to the jurisdiction of this commission and prayed that as to it the complaint might be dismissed. The evidence discloses that the facts are as alleged in the answer, and the complaint as to the Philadelphia company must therefore be dismissed. The rates under attack are solely those of the respondent [Pittsburgh Railways Company]. All the other companies named are not engaged in public service. Their properties have passed into the operating control of the Pittsburgh Railways Company and they have ceased to function as common carriers. Their authority to turn over their public responsibilities and cease to render public service, is found in the provisions of the acts of the General Assembly of Pennsylvania. If they be subject to the jurisdiction of this commission, that jurisdiction cannot be predicated on any of the allegations contained in the complaints under consideration.”

A forward order of the commission, fraught with such consequences, ought to be subject to review by a judicial body at the earliest possible moment, so that unnecessary waste of time, money and effort be avoided.

Such a construction of the statute would be in harmony with the trend of modern legislation in Pennsylvania, and the decisions of our courts. Appeals from the entry or the refusal to enter judgments for want of a sufficient affidavit of defense, from the granting or refusal to grant a preliminary injunction; for a prompt disposition of a challenge to the jurisdiction of a court of equity; from a decree for the payment of alimony pendente lite et id omne genus are familiar illustrations of this tendency. The reasoning of the opinion of Mr. Justice Moschzisker in Germantown Trust Company v. Powell, 260 Pa. 181, is quite persuasive on the proposition we are now considering. If it be said statutes were required to sustain such appeals, we have before us a statute in terms authorizing an appeal from any order of the Public Service Commission and are but stating reasons for the construction of it we adopt.

The Public Service Law of West Virginia allows an appeal to the Supreme Court only from “a final order” of the commission. In City of Charleston v. Public Service Commission, 99 S. E. Rep. 63, that court in distinguishing, if not reversing, an earlier judgment or decree, said: “We are of the opinion that the legislature in the use of this term [final order] meant to cover all such orders as changed the position of the parties, as took from one and gave to the other something that he was not entitled to and could not receive before. If we do not give the statue this construction, then the Public Service Commission may by these provisional or experimental orders put its actions, in most cases, beyond the review of this court for such a period of time as would make the relief of little value when it was finally obtained.” Thus it appears from every point of view the obvious lines of reasoning all converge to a single conclusion. All of these considerations, however, are brushed aside by the learned counsel for the intervening appellee" and the commission by the flat statement that the question has been decided in Franke v. Johnstown Supply Co. (supra) and is no longer debatable. We do not so read the brief opinion. It declares the order of the commission then in question was not a final one. Nobody contends otherwise. The order of this court which took tke record back to the commission was in the nature of a procedendo in a common law action. The Supreme Court did not say, and we believe did not intend to say that no appeal from such an order could be taken to this court, or that we were in error in considering it. They did dismiss the appeals from this court to the Supreme Court as premature, presumably because the statute allowed such appeals only from the final judgment of the law court to which the appeal from the order of the commission had been taken. The inferences drawn by the appellees from the opinion cited are much broader than the language used will warrant. We therefore conclude there is no barrier in the way of our adoption of the necessary result of the reasoning we have indicated. The motions to quash are denied.

In the act creating the Public Service Commission, the legislature clearly indicated two separate and distinct ways in which its extensive powers might be called into activity. It first gave the right to any person or corporation, public service company or municipality to complain of anything done or about to be done, omitted or about to be omitted by any public service company, in violation of the terms of the act, to file a complaint before the Public Service Commission and invoke its aid to redress the grievance complained of. When a proceeding is instituted by complaint in this manner, the duties of the Public Service Commission are clearly prescribed. The public service company complained of is to have the right in the first instance to satisfy the complaint and thus conclude the proceeding. If it declines to exercise that right, then, if the commission be of opinion that a cause of action has been shown by the complaint, it proceeds to a hearing of the same and to a determination as to whether the complaint shall be satisfied in whole or in part, or be dismissed. Seemingly the legislature was not entirely satisfied that all of the benefit to the public intended by the statute would be afforded if the activities of the commission were to depend entirely on the individual complaints of persons or corporations who felt themselves especially aggrieved. It therefore provided that the commission might upon its own motion, and upon such notice as it might deem reasonable under the circumstances, institute an inquiry or investigation and fix a time and place for a hearing of the subject of the inquiry, with the same effect as though a complaint had been made in the manner above recited. These two separate lines of procedure should not he confused, so that the general powers of the commission in an investigation, the scope of which it has previously determined and marked out, should he called in to eke out a complaint, which standing by itself could not be made a sufficient ground to support the relief prayed for. Living as we do under a form of government where justice is administered according to law, the orderly administration of justice is next in importance only to its honest administration. Keeping in mind, therefore, that we are dealing at present with the written complaint of the intervening appellee, and with nothing else, we proceed to a consideration of the proper exercise of the powers of the commission to he directed to the end declared by the statute, to wit: either the satisfaction of the complaint in whole or in part, or its dismissal.

So regarding our duty in the premises, it becomes at once apparent that much of the able briefs of counsel on both sides has been devoted to the consideration of broad questions far outside the lines of what we consider the real scope of the present inquiry. We are not prepared to accept as sound, the broad proposition advanced by counsel for the appellants, that the Public Service Commission has no jurisdiction over the underlying companies, the present appellants. They are existing corporations under the laws of the State of Pennsylvania. They are the final owners of a vast property, which for years has been devoted to a public service and which is to-day being operated as a public service company engaged in a service vital to the vast population which constitutes the City of Philadelphia. They were chartered as public service companies, and so long as they live and move and have their being under and by virtue of thgse charters, they must remain public service companies. But it does not at all follow from this statement that under existing conditions, to which we shall refer, they may at any moment be haled before the Public Service Commission as parties respondent to a complaint which either has to do with the right of the public to have adequate service at fair rates, or which aims at having the commission do something it has neither the right nor the power to do. There is no denial by anybody that the property owned by these companies and devoted to the public service is within the regulatory control of the commission. On the contrary everyone concedes that the commission has under its grasp at the present moment the whole of this property in the lawful possession and control of the operating company. If the commission may lawfully proceed to compel the present possessor of that property in lawful control of it, to respond to the just demands of the public, whence the necessity to go back along the chain of title and bring in, at the expenditure of much time, money and effort, every company which has previously owned or controlled the same property? The interest of the public, which the Public Service Law sought to maintain and uphold, was the right to have adequate transportation, at reasonable rates, over the lines in the City of Philadelphia devoted to the service, without regard to the question of the ultimate ownership of that property. That public right having been fairly conserved by the action of the commission, of what interest is it to the public how the revenues that may be derived from such service are to be apportioned between the lessee operating company and the owners of the property, the underlying companies? In such complaints, as, for instance, the one which started this proceeding, and in the like cases involving the quality of the service and the quantity of the rate, the duty of the commission is simply described, although it may be difficult to perform. The commission is to ascertain the reasonable present value of the property affected with the public service and upon that valuation is to base a rate which will produce a fair return upon the value thus established. In the case of Ben Avon Borough v. The Ohio Valley Water Company, 68 Pa. Superior Ct. 561, Kephart, J., speaking for this court, pointed out on page 577, et seq., the reason of the rule that requires an ascertainment of the present value, that is of the time when the valuation is made, rather than a value based on original cost plus, or on the cost of reproduction. We need not repeat what was there said, being of opinion now, as we were then, that in the respect mentioned the soundness of that judgment cannot be questioned.

The commission in the performance of its duty in ascertaining a fair present value of the property affected with the public service, should not necessarily be obliged to consider the private contracts between the operating company and its lessors, the property owners. As between the parties who made them, those contracts are as secure from interference as those of other citizens. But the public was no party to those contracts, and no stipulation therein contained, for the benefit of one or the other of the parties thereto, can deprive the public of its paramount right to reasonably adequate service at a reasonably fair rate. We are advised by counsel that such is the view entertained by the commissions of other states, although the writer has not had the opportunity of verifying the citations: Re Indianapolis Terminal Co., P. U. R. 1919 A, 278, at 312; Re Utah Light Co., P. U. R. 1920 B, 262, at 270; Re Union Light Co., 6 Mo. P. S. C. 488; Washington Mills v. U. S. Ry., P. U. R. 1919 E, 638; Milwaukee Electric Co. v. Milwaukee, P. U. R. 1919 D, 504, at 536. To say that the state has power to accord to the public right precedence over the contractual rights of parties would be to assert no new doctrine, any more than it could he said that the state was violating or impairing a private contract of mortgage when it made the public taxes a lien ahead of the lien of the mortgage. So in a long line of cases we need not repeat, it has been held that contracts between individuals and public service companies, or between public service companies inter sese, are not impaired when it is found that they interfere with the rendering of equal and adequate service by public service companies, and when, because of such interference, they are compelled to give way to the superior right of the public to have such service.

The contracts in question, therefore, as we view it, cannot be directly attacked before an administrative body, with the avowed end of having the rentals therein provided for reduced to such a sum as the Public Service Commission may determine should have been the rentals provided for. A very learned and able argument was advanced by one of the counsel for the intervening appellee to prove that all, or nearly all, of these leases were absolutely void because the makers of them, themselves being lessees, had exceeded their lawful power in fixing the terms of the lease. Such an argument might well be addressed to the highest court in the land and it seems manifest that a decree, striking down these leases on the purely legal grounds advanced in the argument, would be an exercise of the highest judicial power and authority. We are unable to perceive how it can be seriously urged that upon the complaint pending before the commission, that administrative body could be successfully asked to enter a judicial decree of the magnitude and character indicated. As we said in the outstart, the Public Service Commission has ample power, in the judgment of this court, without doing violence to any established legal principles or orderly method of procedure, to compel the rendition of adequate service at fair rates over the property owned by the appellant companies, and there may come a time when without attempting to overstep its power, it may with propriety take action, the result of which would very seriously affect the rentals under the contracts in question. But as we view the case, no ground is presented. here for the action of the commission sought for in the complaint filed.

Again the record is barren of any evidence that the present operating company will not be able to respond to any reasonable order that may be made by the commission with reference to the service to be rendered or the rates to be charged therefor. The intervener has no right to assume that such a situation will arise and the commission should not regard such assumption as a fact. If it so be that the operating company can and does respond to the orders of the commission and can and does furnish the reasonable service required at the rates that may be fixed, to what end, we ask, must these underlying, nonoperating companies, be now brought into this investigation at heavy expense both in time and in money? We are unable to perceive that the order complained of was in any wise necessary to enable the commission to perform its clearly prescribed duties, and if unnecessary it is oppressive and therefore unreasonable.

We may add the records of the Public Service Commission are public records of which the courts may take judicial notice. In this way we learn there is pending before the commission a complaint of the City of Philadelphia against the Rapid Transit Company having for its object the ascertainment of a just valuation of the property in the possession and control of the operating company, whether acquired by virtue of the leases in question, by its own construction or by acquisition from other sources than the underlying companies. The preliminary report of the commission in that proceeding— 6 Department Rep., p. 2395, declares: “The Philadelphia Rapid Transit Co. has been directed to file with the commission an inventory of all of its property in order that the commission may determine the fair value of its used and useful property as a basis for the proper, permanent rate base.” It might be fairly hoped that with the termination of that proceeding, the necessity for numerous and sporadic complaints by individual citizens or aggregations of citizens would no longer be necessary. We are of opinion the order complained of was unreasonable and unnecessary and that as to the present appellants, the complaint of the intervening appellee should have been dismissed.

A similar order to the one we now enter will be made in each of the other appeals referred to.

The order of the Public Service Commission appealed from is reversed and set aside, and the record is remanded to the commission with direction that as to these appellants the complaint be dismissed at the costs of the intervening appellee.