Jenkins Township v. Public Service Commission

65 Pa. Super. 122, 1916 Pa. Super. LEXIS 30

• Court: Superior Court of Pennsylvania
• Decided: October 30, 1916
• Docket: Appeal, No. 40
• Status: Published

Opinion

Opinion by

Kephart, J.,

. This is an appeal from an order of the Public Service Commission. The assignments of error, material to the determination of this case, are not within the rules of this court. The order of the commission, vital to the appellant’s case, is not assigned for error, nor do the material assignments conform to Rule 14 of this court. In all appeals from the Public Service Commission, the assignments must conform to our Rules of Court; they must be self-sustaining and embody everything necessary to their determination in this court. A mere reference by page number to some part of the record essential to the assignment, or a general statement by counsel of the necessary elements of the assignment, which does not embody the specific action of the commission, will not be sufficient. As these appeals are of recent origin, we will consider the case on its merits.

Jenkins Township applied to the Public Service Commission for the approval of its highway lighting contract with the Jenkins Township Electric Light, Heat and Power Company. The material facts appear in the discussion of the several questions presented by the appeal of the Jenkins Company. We held in Relief Electric Light, Heat and Power Company’s Petition, 63 Pa. Superior Ct. 1, that the general purpose of the Public Service law was within the control of the legislature; that the law was a valid exercise of the police power in the regulation of public service companies, and that such exercise did not impair the obligation of any contract, or deprive any person or corporation affected of property without due process of law, or of the equal protection of the laws. Property right, vested right, or contract did not bar this reasonable exercise of the police power. We further said that while this general proposition of law was true, where the destruction of property was but a mere incident to the enforcement of laws enacted in the interest of health, morals, safety and general public good, yet where the law recognizes the continuation of a business as not being against public welfare, but seeks only to control its method and administration, such control must not be effected so as to work confiscation or destruction of property. In cases of regulation and limitation, the courts will review the reasonableness of the regulation and in so determining will inquire whether property has been taken without due process of law or contract rights have been violated.

When the township made this application for a certificate of public convenience, as it was required to do by Section 11, of Article III, of the Public Service Law, this certificate could not be given unless the contract was necessary or proper for the service, accommodation, convenience or safety of the public. Under this authority the commission has a wide range for investigation. Each phase of the contract as it has relation to or affects the public, should be carefully scrutinized. The details of the contract should properly protect and preserve public rights, property and safety. They should not create unjust discriminations against certain sections of the municipality to be served in favor of the serving company. The proposed service should be necessary for the accommodation of the public. Or, in other words, is there already adequate service at reasonable prices? Under this latter consideration the commission may, exercising a reasonable discretion, refuse the application even though such refusal may modify existing rights.

The evidence necessary for the proper enlightenment of the commission on these matters was present in this case, and the order appealed from is reasonable and in conformity to law.

The form of the advertisement was not conducive to securing the best return to the taxpayers for the money to be invested. It stipulated a Westinghouse metallic flame arc lamp or “any other modern lighting system equally • as good.” It is in the use of such language “equally as good” in advertising proposed contracts for public improvements that inferior materials, at excessive prices, from favored contractors, may be accepted, and the contract thus awarded. The aim desired was competitive bidding.* There could be no competitive bidding except on the lighting system named in this advertisement.

It also appears from the evidence that the Jenkins company was wholly unequipped with proper facilities or generating plant to furnish the commodity. Assuming that the amount of its bond was added to its small capital, there was no evidence that the concern was financially responsible to meet the outlay necessary to fulfill the contract. According to the appellant’s testimony, the service lines necessary to accommodate the contract would be approximately six miles, extending over a territory fourteen square miles. It was proposed by the Jenkins company to construct a plant sufficient to cover this territory with the necessary equipment on its capital of f>5,000. Since 1909, the year it received its charter from the State, this company had ah opportunity to develop its plant. It is only after this alleged contract-was awarded in 1914 that any effort was made by it, and that visible effort consisted in the erection of fifteen poles. This is at best a mere colorable construction, designed for the purpose of holding some right. The commission could not, under this state of facts, be charged with an unreasonable exercise of its powers in withholding its certificate. We do not say that this street lighting contract was being, secured for speculative purposes, to be placed on the market to the company in the field at an attractive figure, but if contracts such as this were sustained under like circumstances, this condition could come about. It was plain from the evidence that this appellant company had not in good faith attempted to exercise its functions. These elements may enter into the commission’s consideration of the application.

The commission found that the territory to be served was thinly settled and was then being supplied by a company furnishing adequate service at reasonable prices from a plant fully equipped for the purpose, and the introduction of the proposed service was unnecessary. For this and other reasons, the certificate was refused. Such action was a valid exercise of the police power. It did not, so far as the appellants are concerned, offend any of the provisions of the constitution above referred to, and it is only through such offense under the facts as are here presented that the Jenkins company may be heard to complain. As we stated in Relief Electric Light, Heat and Power Company’s Petition, supra, at page 7, “The legislature does- not surrender its rights to regulatory control of public service corporations in the grant of a franchise to such corporation: Willcox v. Consolidated Gas Co., 212 U. S. 19. It is a well-recognized principle of legislation that grants of franchises are made and accepted in subordination to the police power of the State, which cannot, be bargained away by the legislature: Penna. Railroad Co. v. Braddock Electric Ry. Co., 152 Pa. 116; Com. v. Jones, 4 Pa. Superior Ct. 362; Powell v. Penna., 127 U. S. 678; Mugler v. Kansas, 123 U. S. 623; Northern Pacific Ry. Co. v. State of Minnesota, 208 U. S. 583; Hudson County Water Co. v. McCarter, 209 U. S. 349-357; Noble State Bank v. Haskell, 219 U. S. 104; Manigault v. Springs, 199 U. S. 473. In Pennsylvania, since the Constitution of 1874, all charters are granted with the express condition that they may be altered, revoked or annulled whenever in the opinion of the legislature they “may be injurious to the citizens of this Commonwealth, in such manner, however, that no injustice shall be done to the corporators” : Section 10, Article XVI. They were further subject to “the exercise of the police power of the State (which) shall never be abridged or so construed as to permit corporations to conduct their business in such a manner as to infringe the equal rights of individuals or the general well being of the State”: Section 3, Article XVI. In Wagner Free Institution v. Philadelphia, 132 Pa. 612, the Supreme Court held that while “under the Constitution of the United States and the decisions of the Supreme Court a charter is ordinarily a contract,” yet where, under such provisions of the Pennsylvania Constitution a charter was revokable at the will of the grantor, it “is only a quasi contract and approaches more closely to the character of a license. To such a charter the rule of the Dartmouth College case does not apply.......No question under the Constitution of the United States, therefore, arises in this case.”

It will be seen that the rights of contract or otherwise received by this Jenkins company from the State were subrogated to the police power inherent in governments, not only by force of judicial decisions but through express constitutional direction. These so-called vested rights of contract and property were given and property acquired thereunder, subject to a possible exercise of the power for the public good. When so used through the public service law, it does not offend the constitutional mandate even though the exercise may, to a certain degree, affect property rights. Though through the constitution and the public service law property may be subject to regulatory control and public service companies may not successfully urge a violation of any constitutional right, yet if the commission’s orders are not warranted by the law itself or are arbitrary or unsupported by evidence, this court will grant relief. Public service companies in appeals are not limited solely to constitutional grounds. But where no right of property or contract could be affected and the commission has not acted arbitrarily, capriciously or without sufficient evidence, and the order made is within the statutory authority, it must be considered as final to this court. As stated by the Supreme Court of the United States, “if the order made by the commission does not contravene any constitutional limitation, and is within the constitutional and statutory authority of that body, and not unsupported by testimony, it cannot be set aside by the courts, as it is only the exercise of an authority which the law vests in the commission”: Pennsylvania Co. v. U. S., 236 U. S. 351-361; I. C. C. v. D., L. & W. R. R. Co., 220 U. S. 235; Los Angeles Switching Case, 234 U. S. 294; Houston v. East & West Texas R. Co., U. S., 234 U. S. 342-359.

This appellant company is further removed from the effect of the Federal constitution in that it had no tangible property and it was not a corporation under the law at the time the public service law was passed. It had not recorded its charter until December 30, 1913, — the act was approved July 26, 1913, — and it had acquired no property until 1914. The recording of its charter was essential to its corporate existence and at the time the public service law was passed it had neither a vested right nor a contract which could have been impaired by the public service law: Braddock Borough v. Penn Water Co., 189 Pa. 379; Guckert v. Hacke, et al., 159 Pa. 303. With this condition before it, under the public service law the Jenkins company was required to apply to the Public Service Commission for a certificate of public convenience “(b) to begin the exercise of any right, power, franchise or privilege.”......And under Section 18, Article V, when application shall be made to the commission by such company for “permission from the commis*sion to begin the exercise of any right, power or franchise ......such approval......shall be given only if and when the said commission shall find or determine that the granting or approval of such application is necessary or proper for' the service, accommodation, convenience, or safety of the public.” Under the act the commission may refuse .in whole or in part the proposed application because conditions did not warrant or the public good demand its unqualified approval. Section 11, of Article III, still retains in the public service law all the regulatory control intended to be thereby exercised. One of the conditions which would warrant the commission’s withholding the certificate of public convenience under the sections above referred to would be that the territory was already adequately served. By the terms of this act the commission is not required or authorized to approve the application until it determines that the privilege is necessary and proper for the public convenience, and for the conservation of public interest. Such finding being within the intent and spirit of the act, this court will not reverse because it may be of a different opinion. The petitioner, to establish the facts necessary for the approval of the contract, is met by the counterclaim of adequate service. The proposed contract was then not necessary “for the service......of the public.” Such finding from sufficient evidence would be conclusive on the question of reasonableness, and such action would violate no right of contract or property, especially to a concern chartered and applying after the public service law was passed.

Generally on the question of adequate service by a company already in the field, the Supreme Court, in Pennsylvania Water Co. v. Pittsburgh, 226 Pa. 624, say: “If anything be manifest it is that if two water mains be laid side by side in the same street equally accessible to the householders on each side conveying double the quantity needed, with double sets of hydrants, pumping stations, offices, salaries, and expenses, one or the other must be abandoned. No community will pay double for any article of necessity or luxury. If the property holder must by compulsory taxation support the municipal system, he will not voluntarily support the private corporation system; such a conflict of interest will inevitably bankrupt the system which depends on the voluntary patronage of the public. We hesitate to assume —every court is bound to hesitate long before assuming —the legislature intends by grants to distinct corporations for public purposes, there shall arise such conflict in the exercise of the franchises as will result in practical destruction of property of any citizen without compensation.” And, in Duquesne Light Company v. City of Pittsburgh, 251 Pa. 557: “The abuse of the surface of city streets by frequent tearing up of the paving, caused by ill advised planning of improvements is notorious, and the effort in this instance upon the part of the city to lessen this evil was certainly commendable.......The public are relieved from the presence of a net work of wires, placed upon the streets by a variety of companies, that tend to constitute a serious hindrance in case of fires, to say nothing of the unsightly disfigurement of the streets.” See Calamut Service Company v. City of Chelton, 148 Wisc. 334. In Relief Electric Light, Heat and Power Company’s Petition, supra, on page 12, in connection with this subject, we mentioned the states which had followed the doctrine here discussed, and in addition to those mentioned, the commissions of the following states have so held: Missouri, New Jersey, Maine, New Hampshire, Vermont, Illinois, Ohio, Nevada, Arizona, Kansas, Georgia, Oklahoma and Maryland. This principle has been uniformly approved by the appellate courts: People, ex rel., New York Edison Co., v. Wilcox, 207 N. Y. 86; Weld v. Gas & Electric Light Commissioners, 197 Mass. 556; Idaho Power & Light Co. v. Blomqusit, 141 Pac. 1083; State, ex rel., Kansas City v. Kansas City Gas Co., 163 S. W. 854; Janicke v. Washington Mutual Telephone Co., 150 Pac. 633; Public Service Commission of Indiana v. State, ex rel., Merchants’ Heat and Light Co., 111 N. E. 10; Eastern T. & T. Co. v. Board of Public Utilities Commissioners, (N. J.) 89 Atl. 924. The appellant’s argument, based on so-called monopolies, does not meet the situation. Under Article II of the Public Service Act, the power is taken from public service companies “to enhance the price of commodities.” The principle of common law monopolies has no application to public utilities which are now largely controlled by' the public service law not only with respect to the price but as to all questions which may arise in connection with the service rendered. The company was controlled, in any attempt to make excessive charges or inferior service, by the power lodged in the Public Service Commission.

It is here important to remember that the application was made to the commission by the township. When the grant was made by the State to the Jenkins company it was a grant of the right to do a lighting business generally in the township. It did not grant a perpetual right to do business with the township authorities in the mode or form then in existence. The State has the absolute control over its subagencies of government (Commonwealth v. Moir, 199 Pa. 534; Bly v. White Deer Mountain Water Co., 197 Pa. 80-92) as well as of its highways and may not only change the method of letting its lighting contracts but may take the letting of such contracts from the municipalities. There could be ho invasion of any right of the corporation, in requiring such contracts to be submitted to the commission for approval. The company did not “possess the inalienable right to make a contract with the township through the authorities.”

Another serious question is presented by this record. The letters patent of the Jenkins company were issued July 21, 1909. The Act of May 16,1889, P. L. 241, provides that corporations must in good faith carry on their work and construct or acquire its necessary buildings, structures, property or improvements within the space of two years from the date of its letters patent. The contract under consideration was awarded December 21, 1914. For a period of four and one-half years this company made no effort to comply with the act of assembly. This act was a part of its organic law and was the limitation placed by the State on the grant contained in the, letters patent. In the application for the certificate of public convenience the commission could consider the capacity of one of the contracting parties to make the contract. If an attempt was made to exercise powers not possessed, the commission could properly refuse to approve such contract, and if it was considered, their act could not be said to be unreasonable. It does not thereby declare a forfeiture or dissolution but simply applies its organic law to the existing facts.

After a careful consideration of the record, the order of the commission is affirmed, at the cost of the appellant.

Oready, P. J., and Henderson, J., dissent.