Louisiana Water Co. v. Public Service Commission

W.D. Missouri

Louisiana Water Co. v. Public Service Commission

294 F. 954, 1923 U.S. Dist. LEXIS 1188, 1923 WL 52514

CourtDistrict Court, W.D. Missouri

DecidedDecember 11, 1923

DocketNo. 35

StatusPublished

Cited by4 cases

This text of 294 F. 954 (Louisiana Water Co. v. Public Service Commission) is published on Counsel Stack Legal Research, covering District Court, W.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Louisiana Water Co. v. Public Service Commission, 294 F. 954, 1923 U.S. Dist. LEXIS 1188, 1923 WL 52514 (W.D. Mo. 1923).

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Opinion

REEVES, District Judge

(after stating the facts as above). [1] 1. Complainant is entitled to demand a fair return upon the reasonable value of its property at the time such property is being used for the public. San Diego Land & Town Co. v. National City, 174 U. S. 739, loc. cit. 757, 19 Sup. Ct. 804, 43 L. Ed. 1154; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, loc. cit. 442, 23 Sup. Ct. 571, 47 L. Ed. 892; Denver v. Denver Union Water Co., 246 U. S. 178, loc. cit. 190, 191, 38 Sup. Ct. 278, 62 L. Ed. 649. There is no controversy here as to the value claimed by complainant,, and upon such valuation the [957]*957Commission has heretofore determined 7% per cent, as a fair and reasonable return, with an allowance of 2 per cent, for depreciation. It is the law that, where the rate fixed by the Legislature or a subordinate body, to whom the power- has been delegated, does not furnish a fair return upon the reasonable value of the property at the time it is being devoted to the public use, such act is so confiscatory in its effect as to violate the Constitution of the United States. Bronx Gas & Electric Co. v. Public Service Com’n, 190 App. Div. 13, 180 N. Y. Supp. 38, loc. cit. 44; Willcox v. Consolidated Gas Co., 212 U. S. 19, loc. cit. 41 and 51, 29 Sup. Ct. 192, 53 L. Ed. 382, 15 Ann. Cas. 1034, 48 L. R. A. (N. S.) 1134. Moreover, no rate of return can be deemed reasonable which is not high enough to attract capital to the form of investment involved in utility properties, and a return of 8 per cent, upon the fair value of such utility properties has been held to be reasonable. Alton Water Co. v. Illinois Commerce Commission (D. C.) 279 Fed. 869, loc. cit. 873; City of Toledo v. Toledo Rys. & Light Co., 259 Fed. 450, loc. cit. 455, 170 C. C. A. 426.

Upon the facts in this case the complainant company, as may be deduced from its schedules of receipts and disbursements, has received practically nothing* on account of investment return and depreciation. Defendant Commission in effect admits this, but says that it has raised the rates on behalf of complainant until such “rates have about reached the limit controlling reasonable rates.” The slight gain which the consumers might obtain from a refusal to allow an increase in rates is as nothing compared with the loss that each consumer would sustain if ruin should be brought to this utility because of refusal to allow it a just return for its service and for depreciation. The defendant Commission has undertaken the delicate and dangerous function of regulating complainant’s rates, and such regulation should be continued with a sense of justice, not only to the complainant, but to the consuming public as well. City of Knoxville v. Knoxville Water Co., 212 U. S. 1, loc. cit. 18, 29 Sup. Ct. 148, 53 L. Ed. 371.

[2] 2. From the testimony it is evident that the complainant, under the regulation of the defendant Commission, has sustained a loss of $35,036 covering a period of nearly five years. It should be allowed to amortize its losses (Galveston Elec. Co. v. Galveston et al., 258 U. S. 388, 42 Sup. Ct. 351, 66 L. Ed. 678), as such losses accrued under the regulation of this Commission. The period of recoupment should be as extensive as the period of loss. The company, however, agrees that such recovery may comprise a period of 10 years. Euture rate schedules should be so adjusted as to permit the amortization of this loss.

[3] 3. The right of the complainant to proceed by injunction here is not challenged. The court cannot make rates, but it may interfere where the schedule of rates submitted by regulatory authorities is confiscatory. City of Toledo v. Toledo Rys. & Light Co., 259 Fed. 450, loc. cit. 455, 170 C. C. A. 426: City of Knoxville v. Water Co., 212 U. S. 1, loc. cit. 18, 29 Sup. Ct. 148, 53 L. Ed. 371.

From the foregoing it is apparent that the rates prescribed by the defendant Commission are inadequate, unjust, and confiscatory, and therefore in contravention of the Fifth and Fourteenth Amendments [958]*958to the Constitution of the United States. The temporary injunction heretofore granted will continue in accordance with the prayer of the bill for such relief until said Commission may prescribe and promulgate just and reasonable rates for complainant, and in the interim the schedule of rates heretofore filed with said Commission, and effective under the temporary restraining order, shall continue. The excess of collections over former and suspended rates now deposited or impounded with the clerk of this court shall be -released after payment of expenses to complainant. Until such orders have been made by the Commission, this court will retain jurisdiction of the case.

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REEVES, District Judge

(after stating the facts as above). [1] 1. Complainant is entitled to demand a fair return upon the reasonable value of its property at the time such property is being used for the public. San Diego Land & Town Co. v. National City, 174 U. S. 739, loc. cit. 757, 19 Sup. Ct. 804, 43 L. Ed. 1154; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, loc. cit. 442, 23 Sup. Ct. 571, 47 L. Ed. 892; Denver v. Denver Union Water Co., 246 U. S. 178, loc. cit. 190, 191, 38 Sup. Ct. 278, 62 L. Ed. 649. There is no controversy here as to the value claimed by complainant,, and upon such valuation the [957]*957Commission has heretofore determined 7% per cent, as a fair and reasonable return, with an allowance of 2 per cent, for depreciation. It is the law that, where the rate fixed by the Legislature or a subordinate body, to whom the power- has been delegated, does not furnish a fair return upon the reasonable value of the property at the time it is being devoted to the public use, such act is so confiscatory in its effect as to violate the Constitution of the United States. Bronx Gas & Electric Co. v. Public Service Com’n, 190 App. Div. 13, 180 N. Y. Supp. 38, loc. cit. 44; Willcox v. Consolidated Gas Co., 212 U. S. 19, loc. cit. 41 and 51, 29 Sup. Ct. 192, 53 L. Ed. 382, 15 Ann. Cas. 1034, 48 L. R. A. (N. S.) 1134. Moreover, no rate of return can be deemed reasonable which is not high enough to attract capital to the form of investment involved in utility properties, and a return of 8 per cent, upon the fair value of such utility properties has been held to be reasonable. Alton Water Co. v. Illinois Commerce Commission (D. C.) 279 Fed. 869, loc. cit. 873; City of Toledo v. Toledo Rys. & Light Co., 259 Fed. 450, loc. cit. 455, 170 C. C. A. 426.

Upon the facts in this case the complainant company, as may be deduced from its schedules of receipts and disbursements, has received practically nothing* on account of investment return and depreciation. Defendant Commission in effect admits this, but says that it has raised the rates on behalf of complainant until such “rates have about reached the limit controlling reasonable rates.” The slight gain which the consumers might obtain from a refusal to allow an increase in rates is as nothing compared with the loss that each consumer would sustain if ruin should be brought to this utility because of refusal to allow it a just return for its service and for depreciation. The defendant Commission has undertaken the delicate and dangerous function of regulating complainant’s rates, and such regulation should be continued with a sense of justice, not only to the complainant, but to the consuming public as well. City of Knoxville v. Knoxville Water Co., 212 U. S. 1, loc. cit. 18, 29 Sup. Ct. 148, 53 L. Ed. 371.

[2] 2. From the testimony it is evident that the complainant, under the regulation of the defendant Commission, has sustained a loss of $35,036 covering a period of nearly five years. It should be allowed to amortize its losses (Galveston Elec. Co. v. Galveston et al., 258 U. S. 388, 42 Sup. Ct. 351, 66 L. Ed. 678), as such losses accrued under the regulation of this Commission. The period of recoupment should be as extensive as the period of loss. The company, however, agrees that such recovery may comprise a period of 10 years. Euture rate schedules should be so adjusted as to permit the amortization of this loss.

[3] 3. The right of the complainant to proceed by injunction here is not challenged. The court cannot make rates, but it may interfere where the schedule of rates submitted by regulatory authorities is confiscatory. City of Toledo v. Toledo Rys. & Light Co., 259 Fed. 450, loc. cit. 455, 170 C. C. A. 426: City of Knoxville v. Water Co., 212 U. S. 1, loc. cit. 18, 29 Sup. Ct. 148, 53 L. Ed. 371.

From the foregoing it is apparent that the rates prescribed by the defendant Commission are inadequate, unjust, and confiscatory, and therefore in contravention of the Fifth and Fourteenth Amendments [958]*958to the Constitution of the United States. The temporary injunction heretofore granted will continue in accordance with the prayer of the bill for such relief until said Commission may prescribe and promulgate just and reasonable rates for complainant, and in the interim the schedule of rates heretofore filed with said Commission, and effective under the temporary restraining order, shall continue. The excess of collections over former and suspended rates now deposited or impounded with the clerk of this court shall be -released after payment of expenses to complainant. Until such orders have been made by the Commission, this court will retain jurisdiction of the case.

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294 F. 954, 1923 U.S. Dist. LEXIS 1188, 1923 WL 52514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/louisiana-water-co-v-public-service-commission-mowd-1923.

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