Homestead Co. v. Des Moines Electric Co.

248 F. 439, 160 C.C.A. 449, 12 A.L.R. 390, 1918 U.S. App. LEXIS 1440

• Court: Court of Appeals for the Eighth Circuit
• Decided: January 7, 1918
• Docket: No. 4889
• Status: Published

Opinions

SANBORN, Circuit Judge.

The question which this case presents is the sufficiency of the facts stated in the complaint to constitute a cause of action, and it is brought to the attention of this court by a writ of error to reverse an order and judgment which sustained a general demurrer.

The grievance of the plaintiff is that tire defendant, Des Moines Electric Company, a public service corporation, that was engaged in furnishing light and power to the plaintiff, and to other consumers thereof, in the city of Des Moines, unjustly discriminated against the plaintiff in the rates it charged and collected for the light and power it furnished, in that (count 1) it charged and collected of the plaintiff’s competitor in that city, the Register & Reader Company, a corporation, only about 40 per cent, of the amount charged and collected of the plaintiff for contemporaneous service for like operations under substantially similar circumstances and conditions, to the plaintiff’s damage in the sum of $2,950.94, which was 60 per cent, of the amount the plaintiff paid for the defendant’s service in the operation of that part of its business in competition with the business of the Reader Company; (2) in that (count 2), while the defendant charged and collected. of many of its other customers low and reasonable rates, it charged and collected of the plaintiff for similar service higher rates that were unreasonably exorbitant, and $4,918.23 in excess of reasonable, just, and compensatory rates; and (3) in that (count 3) the defendant divided its customers by a specified standard into wholesalers and retailers, and established a low and reasonable rate for its service to wholesalers and a higher rate for its service to retailers, that by the specified standard the plaintiff was a wholesaler, but the defendant charged and collected of it the retail rates, under the false representation that it was serving the plaintiff at rates as low as it was serving any of its customers in a like situation, when the fact was that it was exacting from the plaintiff $2,321.80 more than it would have collected from it, if it had collected the wholesale rates, and was thereby charging and collecting unreasonably exorbitant rates, $2,-321.80 in excess of reasonable and compensatory rates.

The first count of the complaint set forth these facts: During all the time in which the plaintiff alleged that the defendant was exacting from it discriminatory and exorbitant rates, those rates did not exceed the maximum rates which, by an ordinance of the city of Des Moines, the defendant was expressly authorized to charge and collect for furnishing the light and power. During this time the plaintiff was printing a newspaper and operating a job printing, electrotyping, and photo-engraving plant, and the Deader Company was running two daily newspapers and a job printing and photo-engraving plant. The job printing and photo-engraving plant of the Deader Company was operated, as was the plaintiff’s like plant, by a large number of motors for the most part in the daytime. The light and power to operate each of them were furnished by the defendant during the same time under like conditions. The two plants put forth the same kind and quality of work, the owners of these plants bought and sold in the same market, and the Deader Company was the plaintiff’s most active competitor. There was an established market value for the products of the two plants, so that the plaintiff was unable to charge more for its output than was charged by the Deader Company for its similar products. The defendant during the time specified furnished the Deader Company the light and power to operate its job printing and photo-engraving plant at a rate which was only about 40 per cent, of the rate it charged and collected for the light and power it furnished the plaintiff to operate its like plant. The Deader Company, by reason of receiving this light and power at a rate which was 40 per cent, of the rate collected of the plaintiff, was enabled to and did put out its product more cheaply than the plaintiff could send its output forth, was enabled to and did bid under the plaintiff in making competitive prices for printing and photo-engraving, the plaintiff was obliged to meet the prices set by the Deader Company in order to hold its printing and photo-engraving business, its overhead expense was unduly increased by the high rates the defendant exacted from it, and it “was deprived of its fair, legitimate profit, and damaged” to the extent of $2,950.94, which is 60 per cent, of the amount it paid the defendant for the light and power which the latter furnished to operate its job printing and photo-engraving plant.

The sufficiency of these facts to constitute a cause of action for unjust discrimination is denied on the grounds (a) that the plaintiff is not entitled to recover on account of such discrimination the difference between the amount it paid and the amount it would have paid at the rate its competitor enjoyed, and that that difference is not the measure of its damages; (b) that the facts pleaded failed to show that the plaintiff and the Leader Company were situated alike; and (c) that they do not disclose facts sufficient to sustain a recovery for loss of profits.

The sufficiency of the facts set forth in the second and third counts, each of which is based on a claim that the rates charged to and collected by the plaintiff were exorbitant and unreasonable, because they exceeded those charged and collected of other consumers, and by each of which the plaintiff seeks to recover as money had and received the difference between the amount the plaintiff paid and the amount it would have paid, if the rates to it had been just and reasonable, is denied on the ground that, where maximum rates are prescribed for the service of a public seryice corporation by a state or a municipality lawfully empowered so to do, no individual consumer or party interested in the rates, who has paid rates not exceeding the prescribed limit, may maintain an action against the corporation on the ground that those rates were unreasonable or exorbitant.

There have been conflicting decisions and there has been much discussion about some of the questions which the propositions asserted by counsel present. But a review of the opinions of the courts and a thoughtful consideration of the arguments of counsel have convinced that the stronger reasons and the weight of authority have established these rules of law by which the decision of the question presented in this case must be determined.

[ 11 it is the duty of a public service corporation, lawfully authorized to use the streets and public places of a municipality in order to furnish to consumers -water, gas, electricity, light, heat, power, or any other public utility, to render like contemporaneous service for like compensation to consumers conducting like operations under like conditions and circumstances. For unjust discrimination between competitors, and substantial injury to one of them caused by a breach of this duty, the injured competitor may maintain an action in tort against the public service corporation for the pecuniary loss inflicted upon him by such discrimination. Curtis on Electricity, § 36; Western Union Telegraph Co. v. Call Publishing Co., 181 U. S. 92, 99, 100, 21 Sup. Ct. 561, 45 L. Ed. 765; Pennsylvania R. R. Co. v. International Coal Co., 230 U. S. 184, 203, 204, 33 Sup. Ct. 893, 57 L. Ed. 1446, Ann. Cas. 1915A, 315; Armour Packing Co. v. Edison Electric Illuminating Co., 115 App. Div. 51, 100 N. Y. Supp. 605, 607; St. Paul Book & Stationery Co. v. St. Paul Gaslight Co., 130 Minn. 71, 153 N. W. 262, 266, Ann. Cas. 1916B, 286.

[2] Unjust discrimination will not sustain an action against a public service corporation, in favor of the injured competitor, for the difference between the amount he paid and the amount he would have paid if he had paid at the same rate as his competitor similaily situated for like service, as for money had and received, or any other action at law, except an action in tort for his damages. Nor is such difference the measure ol his damages. They may be the same as, or more or less than, such difference, and they must be pleaded and proved before they may be recovered. Pennsylvania R. Co. v. International Coal Co., 230 U. S. 184, 198, 200, 201, 202, 203, 206, 33 Sup. Ct. 893, 57 L. Ed. 1446, Ann. Cas. 1915A, 315; Meeker & Co. v. Lehigh Valley R. R. Co., 236 U. S. 412, 429, 35 Sup. Ct. 328; Lehigh Valley R. R. Co. v. Clark, 207 Fed. 717, 724, 725, 731, 125 C. C. A. 235; Lehigh Valley R. Co. v. American Hay Co., 219 Fed. 539, 541, 542, 135 C. C. A. 307; Knudsen-Ferguson Fruit Co. v. Michigan Central R. Co., 148 Fed. 968, 79 C. C. A. 46; Hoover v. Pennsylvania R. Co., 156 Pa. 220, 27 Atl. 282, 290, 22 L. R. A. 263, 36 Am. St. Rep. 43.

[3] In the making, regulation, and litigation regarding rates, “unreasonable rates” are either those that are so low as to be noncom-pensatory, or those that are so much higher than merely compensatory rates that they are exorbitant. The fact that two rates, or tft o sets of rates, are unjustly discriminatory, neither establishes nor necessarily implies that either of them is “unreasonable.” Interstate Commerce Comm. v. Baltimore & Ohio R. R. Co., 145 U. S. 263, 277, 12 Sup. Ct. 844, 36 L. Ed. 699; American Express Co. v. South Dakota. 38 Sup. Ct. 656 (U. S. Supreme Court opinion filed June 11, 1917).

[4] A public service corporation furnishing its utility under and pursuant to an act of the Legislature of a state, or under a lawful ordinance of a city, or under other legal provision, which prescribes máximum rates for its service, may fix its own rates, not exceeding the limit thus prescribed, and such rates are presumed to he reasonable. Individuals interested therein as consumers, users, or otherwise may not maintain actions ?.t law or suits in equity against the public service corporation, on the ground that such rates are unreasonable, without having first secured decision or action to that effect by the public tribunal authorized to prescribe the maximum limit of the rates changing tlie limit, or adjudging the rates complained of unreasonable. Griffith v. Vicksburg Waterworks Co., 88 Miss. 371, 40 South. 1011, 1014, 8 Ann. Cas. 1130; Vicksburg v. Vicksburg Waterworks Co., 206 U. S. 496, 509, 515, 516, 27 Sup. Ct. 762, 51 L. Ed. 1155; St. Paul Book & Stationery Co. v. St. Paul Gaslight Co., 130 Minn. 71, 153 N. W. 262, 264, 265, Ann. Cas. 1916B, 286; Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 432, 433, 436, 437, 439, 440, 441, 443, 446, 447, 448, 27 Sup. Ct. 350, 51 L. Ed. 553. 9 Ann. Cas. 1075; Paris Mountain Water Co. v. Camperdown Mills, 98 S. C. 304, 82 S. E. 417, 418; Union Dry Goods Co. v. Georgia Public Service Corporation, 142 Ga. 841, 83 S. E. 946, 947, L. R. A. 1916E, 358; Brooklyn Union Gas Co. v. City of New York, 188 N. Y. 334, 81 N. E. 141, 142, 15 L. R. A. (N. S.) 763, 117 Am. St. Rep. 868.

[5'J The application of these rules to the facts pleaded compels the conclusions: (1) That the second and third counts of the complaint state no cause of action because they are founded on the claim that the rates charged to and collected of the plaintiff were exorbitant, extortionate and unreasonable, although they were less than the maximum rates prescribed and adjudged reasonable by the city, and that tribunal has never adjudged them unreasonable, or modified the terms or effect of its prescribing ordinance; (2) because by these counts the plaintiff seeks recovery of the difference between the presumptively reasonable rates the plaintiff paid and the lower rates other'consumers-of light and power similarly situated paid, not on the ground of damages sustained, but on the ground that this was money ha.d and receiv-' ed by the defendant which equitably belonged to the plaintiff, and an action of that character is not maintainable for this difference; and (3) the facts set forth in the first count of the complaint will not sustain an action as for money of the plaintiff had and received by the defendant for the difference between the amount which the plaintiff paid and the amount it would have paid if it had been charged the rates its competitor, the Leader Company, enjoyed, and the only cause of action they máy be sufficient to maintain is one in tort for the pecuniary loss caused to the plaintiff by the alleged unlawful discrimination, and the difference between the amount paid by the plaintiff and the amount he would have paid at the rates charged its competitor is not, and the pecuniary loss caused by the unjust discrimination is, the measure of those damages.

It is contended that the facts pleaded are insufficient to sustain a cause of action for these damages, because those facts do not show that the plaintiff and the Leader Company were similarly situated, or that they received like service from the defendant, in that they disclose the fact that the defendant, in addition to furnishing like light and power to the two competitors for their respective job printing and photo-engraving plants, furnished light and power to the plaintiff to enable it to print a newspaper and operate an electrotyping plant, and to the Leader Company to enable it to1 print two newspapers. The plaintiff makes no claim of any unjust discrimination in the furnishing of light -and power for the printing or operation of the newspapers or the electrotyping plant, but it alleges that the two job printing plants were engaged in the same business, manufacturing and selling like and competitive products, that their owners bought and sold in the same markets, that the defendant furnished their job printing and photo-engraving plants like power and collected of the owner of one but 40 per cent, of the rates it charged and collected of the other, and that this was done during the same period of time. There can be no doubt that if the only service rendered by the defendant to the plaintiff and to the Leader Company had been to furnish them light'and power for their job printing and photo-engraving plants the averments of these facts would have been ample to permit full proof that the two companies were similarly situated and were receiving like service at the same time and place, and that the defendant unjustly discriminated against the plaintiff in its charges and collections. It is possible that in the charges and collections for the other services which the defendant rendered to the two competitors it discriminated against the Leader Company to an amount equal to the amount by which it discriminated against the plaintiff in the collection of charges for the service to the job printing and photo-engraving plants, or that there was some other fact or condition to offset the unjust discrimination which it is alleged the defendant committed in its treatment of these plants. But in the absence of pleading or proof of any such counter discrimination or offset the court may not presume the existence thereof, and on the face of the complaint the light and power furnished to the two job printing and photo-engraving plants is alleged to have been so like and to have been furnished to competitors so similarly situated as to present a sound basis for the averment of unjust discrimination.

Counsel for the defendant argue that the cause of action set forth in the first count is not in tort for damages, but is for the difference in the amount charged and collected of the plaintiff for the service of the defendant to its job printing and photo-engraving plant, and the amount it would have paid for that service at the rates charged to the .Leader Company for like service, and that it is based on the claim that the amount of this difference constitutes money had and received by the defendant which justly and equitably belonged to the^ plaintiff. The pleading lends, plausible support to this argument, and indicates that the pleader may have indulged the hope that his client could recover this difference, without proof of damages caused by the unjust discrimination, upon the theory which has been stated. But the question before this court is not one of the form of the action or of the theory of counsel. It is, does the complaint state facts sufficient to sustain an action in tort for damages caused by the unjust discrimination? It sufficiently states like contemporaneous services to the job printing and photo-engraving plants of the two competitors, the like business situation and circumstances of the competitors and of their plants, and the charge and collection from one of rates times the rates collected of the other, avers that this discrimination compelled the plaintiff to pay for substantially like service “>2,950.46 more than it would have paid at the rates charged the Leader Company, that on account of its competitive relation with that Company it was compelled to sell the product of its job printing and photo-engraving business at the prices set by the Leader Company, and that, “its overhead expense being unduly increased by the unfair requirements of defendant, plaintiff was deprived of its fair and legitimate profit and damaged to the extent of said overcharge.” The complaint then “demands damages against defendant -for the sum of $2,950.94 actual damages with interest thereon.” Since a demand of a specific amount of damages permits the recovery of any less amount that may be proved, the averment of the specific amount of the damages and the prayer therefor does not disqualify this complaint from sufficiently pleading a cause of action in tort for unjust discrimination.

[6 ] It is contended, however, that the only damages pleaded are loss of profits, and that the nature, character, extent, and facts showing the certainty of such loss of profits have not been sufficiently set forth. It is true that the general rule is that the expected profits of a commercial business are generally too remote, speculative, and uncertain to sustain a judgment for their loss. But there is an exception to this rule, to the effect that the loss of profits from the destruction, interruption, or depression of an established business may be recovered, if the plaintiff makes it reasonably certain by competent proof what the amount of his loss actually was. It is true that the proof must pass the realm of conjecture, speculation, or opinion not founded on facts, and must consist of actual facts, from which a reasonably accurate conclusion regarding the cause and the amount of the loss can be logically and rationally drawn. Central Coal & Coke Co. v. Hartman, 111 Fed. 96, 98, 99, 102, 49 C. C. A. 244, 246, 247, 250. It is not, however, necessary in pleading such profits to set forth all the details of the requisite proof. In the case at bar the pecuniary loss which the unjust discrimination inflicted upon the plaintiff, and not the difference between the amount it paid and the amount it would have paid at the.rates charged the Leader Company, is the measure of its damages. Those damages may be the same amount as that difference; they may be more, and they may be less. The plaintiff in effect avers in this complaint that, if the defendant had not unjustly discriminated against it, it would have sold the same amount of its products from its job printing and photo-engraving.plant for the same prices that it did sell them, and that it would in that case have had left, after paying its e.\ anses, larger profits than it did have by the $2,950.94 which the defendant exacted of it by the unjust discrimination. It may be that the plaintiff will have difficulty in proving, it may be that it will be unable to prove, such or any loss of profits under the wise and conservative rules of law which guard against speculation, uncertainty, and conjecture in the determination of such losses. But the averments of the complaint are sufficient to permit it to present competent evidence of a loss of profits caused by the unjust discrimination it pleads upon the theory set forth in its complaint.

The judgment below is accordingly reversed, and the case is remanded to the District Court, with instructions to permit the defendant to answer the complaint.