City of Van Wert v. Van Wert Public Service Co.

Ruling on motion to dissolve injunction.

On June 10, 1910, upon the petition and motion of the plaintiff, and for good cause shown, a temporary injunction was allowed in this action restraining the defendant from charging *92the plaintiff and other private consumers of the city of Van Wert, Ohio, for electricity for commercial use a price in excess of that fixed by ordinance No. 283, adopted by the council- of said city May 5, 1910. On July 13th a motion to dissolve this injunction was filed, and on August 3d it was argued and submitted. The motion is based on the reasons set forth in defendant’s answer, which was filed on the same date as the motion. At the hearing, it was stipulated that the sixth ground of the motion, being the sixth defense, should not be considered by the court. That defense is that the rates prescribed by the ordinance are unreasonable and confiscatory and for that reason the ordinance is void.

The first ground of the motion, being the first defense of the answer, is a general denial of everything in the petition except the averments of incorporation and of succession, by the defendant, to the rights -of the original grantee of the lighting franchise in question. Nothing was offered in argument as to this ground, which, manifestly, would require proof to reach a conclusion in view of the issues of fact joined. The only thing in the nature of proof offered was an admission by defendant with respect to a "readiness to serve charge,” and to it reference will be made later on.

The second ground of the motion, being the second defense of the answer, raises the question of the legal capacity of the plaintiff to sue in this behalf, on the theory that it is not a consumer of current under the ordinance, and hence has no interest in the result of the controversy. The action is brought by the city, by its city solicitor, under favor of Section 4312, General Code. While it was urged that the words "obligation or contract made on behalf of the corporation,” which are used in that section, contemplate only public contracts or obligations wherein the municipality, as a legal entity, is the beneficiary or the obligee, yet an action brought in the same manner and for similar ends seems to have the sanction of the Supreme Court in 65 O. S., 186, Logan Natural Gas & Fuel Co. v. City of Chillicothe, where the city solicitor brought the action in the name of the city. Counsel for defendant asked to have pointed out the' particular part of *93the section mentioned to which this action might be appropriately-assigned. Snrely, when the council granted the franchise to the defendant’s predecessor, and its assigns, an obligation devolved upon it and its assigns, exercising the franchise, to furnish electric light and power agreeably to the provisions of the ordinance and of the law. Not only were a right and an easement thereby granted, but a public duty imposed. If it is being violated, a specific performance may be obtained through the medium of a mandatory injunction (Gaslight Co. v. Zanesville, 47 O. S., 50), or, at least, an injunction obtained against such violation.

The third ground of the motion, being the third defense of the answer, is that the ordinance No. 283 is invalid because the title is in conflict with the body of the ordinance, contrary to the provision of the statute (Section 4226, General Code), that no ordinance shall contain more than one subject, which shall be clearly expressed in its title. The court can not find any conflict between the body of the ordinance and its title. The ordinance purports to deal with one subject, viz.: the regulation of the price to be charged by the defendant for furnishing electricity, and the payment therefor. That this is a single commercial transaction, can hardly be- gainsaid. The title expressly states that this is the purpose of the ordinance.

The fourth ground of the motion, which is the fourth defense of the answer, is" an averment that defendant is not charging any private consumer of electrical current used for illuminating purposes a price in excess of eleven cents per kilowatt, the maximum fixed by the ordinance. This averment raises an issue of fact. In support of defendant’s contention in this behalf, it offered a schedule of prices which it is charging. By this schedule it appears the maximum charge is eleven cents per kilowatt, and that certain discounts are allowed consumers, based upon a variation in quantity of current consumed, which discounts are different and higher, that is to say, require a larger payment of the consumer than those fixed by the ordinance. In addition to this, the defendant charges, as appears by this schedule and admitted by counsel, seventy-five cents per month each consumer for a-“readiness to serve” charge. This ground will be-considered in connection with the next one, the fifth.

*94The fifth ground of the motion, which is the fifth defense of the answer, is that, admitting the power of the council to “fix the maximum rate, ’ ’ it has no power to fix the rate at which the defendant shall discount bills for current furnished. If this was the purpose of the provision complained of perhaps the contention would be correct; but, while the form of the regulation, and its language as well, is in the manner of a discount, the effect of the provision is a regulation of rates and a fixing of the maximum charge permissible for varying quantities. The defendant earnestly contends that when the council has fixed one maximum charge, its power to regulate is fully exercised and is thereafter exhausted, and relies on the language of the opinion in Gas & Fuel Co. v. City of Chillicothe, 65 O. S., 186, 205, to sustain its contention. The purpose of the judge delivering the opinion obviously was to explain the end to be secured by the statutes authorizing municipal regulation, and to show that the legislative intent was not to authorize the fixing of a minimum price, though such price was specifically mentioned in the statute, but to protect the public ‘ ‘ from the hardships of excessive charge. ’ ’ To accomplish this, he adds, “therefore, the council is authorized to fix the limit above which the gas company can not go. ’ ’ The learned judge certainly can not have intended to substitute the term “fix” for the term “regulate,” which is the word used in the statute, in the sense of limiting the power implied by the latter to but one exercise of it to various differing conditions. In “fixing” the so-called discounts, the council was still determining the maximum beyond which the company could not go, and fixing them for the several classes of consumers into which any consumer might bring himself according^ as his necessities might determine.

In all commercial transactions, it is universally recognized that the buyer of large quantities gets a lower price, and it was a recognition of this business principle or practice doubtless that prompted the council to fix a lower rate for a larger quantum of current than for a smaller. The only exceptions to this practice that now occur to the court’s mind are the government’s uniform charge for postage stamps, and the newly-adopted policy of gov*95ernmental regulation of railroad rates. But these are easily dif-. ferentiated from ordinary commercial transactions, the former because.the charge is more in the nature of a tax than a compensation, not only because of the disparity between the amount of the charge and the service rendered, but because the facilities for the interchange of intelligence are properly considered to be peculiarly within the province and fostering care of a government such as ours; and the latter, because they are in their nature highways, in the common use of which, on equal terms, everybody is interested. So long as the regulation here complained of is not confiscatory, but permits a reasonable profit to the defendant, no legal objection can be urged against what has become customary in arranging a schedule of charges for electric current. The defendant itself has such a schedule of so-called “discounts,” the effect of which is to make a lower rate to the consumer of the larger quantity and thex*e are four different classes of such “discounts.” “Discount” is an unfortunate word to have used and does not exactly express what the council intended.

The “readiness to serve” charge, which admittedly is made and is a monthly charge of seventy-five cents to all consumers, is in excess of the charges permitted by the ordinance, and hence .is in violation of its prohibition to charge any other or further sums than permitted by the ordinance. It is contended by the defendant that this is not a charge for electricity and that it is not charging to exceed eleven cents per kilowatt in that behalf. But this contention is untenable when measured by the effect on the consumer of the charge made. If it is the duty of defendant to furnish electricity to the consumer at not to exceed the maximum price fixed by the ordinance, the consumer is entitled to have the electricity furnished to him at such price, and ■any charge or device that will compel him to pay more than such price in order to use the current, be it called by whatsoever name, practically increases the amoxxnt he has to pay for the service, and it is to regxxlate such charge that is the purpose of the ordinance and that it may be regulated the intent of the Legislature.

Seventy-five cents per month is the interest on $150. While, in some cases, it is conceivable that an expense of $150 might be *96required to install the wires and appurtenances so as to put the defendant in position to furnish current to some particular consumer, yet the cost can not be uniform in all cases, though the charge is, and hence there is bound to be discrimination somewhere. “* * * so long as such * * # company continues to exercise any of its franchises within the * * * municipality, it may be compelled to exercise its franchise therein fairly and without discrimination. ’ ’ (Gas Co. v. City, 81 O. S., 33, 34.)

Again, the initial expenditure of a much larger sum is necessary to install the plant, or to renew it or parts of it from time to time, in order to get ready to serve at the outset, or continue in a state of readiness afterward, and it would be a charge of the same nature to pro rate the interest on this installation or renewal expense among the consumers, as it is to make this “readiness to serve” charge. A fair return on the whole investment, keeping in mind what the defendant must do in order to furnish the current to the consumer, is presumed to have been contemplated by the council when it “fixed” the rates. So it will appear that, if for no other reason than this overcharge, the injunction should not be dissolved.

The sixth ground of the motion, being the sixth defense of the answer, is the claim that the so-called “discounts” are confiscatory because they would require the defendant to furnish electricity at a loss. As was said at the outset, no argument was adduced nor proof offered in this behalf and the court has not considered it. If the claim is true, the ordinance — at least to this extent — is void. -

Without committing itself, in advance, to any figure as a fair 'return on the investment the court adverts to the case of Wilcox et al v. Consolidated Gas Co. of New York, 212 U. S., 19-55 (53 L. Ed., U. S., 382), as perhaps the latest statement of principles to govern such an inquiry.

The motion to dissolve is overruled. Exception.