People v. "Eastern Sugar Associates, a Trust"

delivered the opinion of the Court.

This is a suit by the People of Puerto Rico against Eastern Sugar Associates for the collection of money. Pursuant to Act No. 221, Laws of Puerto Rico, 1942, known as the “Act Regulating the Sugar Industry of Puerto Rico”, the defendant applied for and obtained franchises authorizing it to operate four sugar mills to grind sugar cane owned by it and independent colonos. Each franchise provided in Section six that for the exercise thereof a specific sum shall be paid annually on March 15 of each year to the Treasurer of Puerto Rico.1 During the years from 1943 to 1947 the defendant operated its mills but failed to pay any of these sums to the Treasurer. The People thereupon instituted this suit in the district court for the collection of money. After a trial on the merits, the lower court entered a judgment in favor of The People in the amount of $12,000 with interest and costs. The case is here on appeal from that judgment.

The appellant assigns thirty-two errors. However, it groups these errors into six points of argument: (1) no contract in the nature of a franchise or concession exists between the appellant and the People obligating the appellant to pay the amounts demanded in this action; (2) the franchises are licenses to continue to conduct a legitimate business subject only to reasonable regulation under the *550police power; (3) the People, under the pretense of exercising the police power, had no authority to exact royalties or a license fee as a condition for enjoying the constitutional right of the appellant to engage in business, either under the terms of a franchise or a license; (4) the authority conferred by the Legislature on the Public Service Commission to determine royalties or license fees to be charged to the appellant was an unconstitutional delegation of its legislative powers; (5) the Commission did not observe the requirements of due process of law in fixing the royalties or license fees; (6) the appellant is not estopped from defending this suit.

We find it unnecessary to consider these arguments of the appellant. When it filed its application for these franchises, the appellant made the following statement: “In filing this Petition, Petitioners do not admit the validity of said Act No. 221 but assert its invalidity and file this Petition under protest and duress, and solely to avoid the penalties, criminal and civil, and losses to which they would be subject by reason of said Act if they failed to apply for a franchise as provided therein; and do not waive any of their rights but do hereby expressly reserve all of the' same, including expressly their right to contest the validity and constitutionality of said Act and of any provision thereof, and of any order, rule, regulation, or act issued or done under said act.” In accepting the franchises by letter of February 23, 1944, it made a similar statement.2 The defendant there*551upon proceeded to do business under these franchises. The insular authorities made no effort to prevent the defendant from grinding its own cane and the cane of independent colonos, despite the reservations in the quoted statements of the defendant. The government therefore in effect treated the letter of February 23, 1944 as a valid acceptance of the franchises as provided in § 11 thereof.3

The statements by the defendant that it was reserving its rights to obtain a judicial determination of the validity of the provisions of the franchises were superfluous. They were entitled to take this action even if they had not made such reservations. This was made plain both by this Court in People v. A. Roig, Sucrs., 63 P.R.R. 17, 35-36, and by the Court of Appeals in affirming the judgment in that case in Roig v. People of Puerto Rico, 147 F. 2d 87, 92 (C. A. 1, 1945). To the same effect, W. W. Cargill Co. v. Minnesota, 180 U. S. 452, 468.

However, the defendant did not undertake to attack any of the terms of its franchises in the manner provided *552by law. On the contrary, it simply folded its arms and ignored the franchises, at least insofar as they obligated it to pay the Treasurer the specified sums per year. In this suit for collection of money the defendant for the first time assails the validity of the franchises, and complains of the alleged lack of a hearing in connection with fixing the royalties provided in the franchises and of the amounts thereof. But these matters are not properly before us. The defendant was entitled to raise them by filing in the district court, pursuant to § § 78-90 of Act No. 70, Laws of Puerto Rico, 1917, Yol. II, and § § 50 and 51 of Act No. 221, a petition for review of the decision or order of the Commission granting the franchise and providing for its terms. Godreau & Co. v. Public Service Comm’n, 71 P.R.R. 608; Commission v. Havemeyer, 296 U. S. 506; South Porto Rico Sugar Co. v. Distirct Court, 62 P.R.R. 811; Quilinchini et al. v. Public Service Commission of Puerto Rico et als., per curiam, decided June 13, 1945; In the Matter of Herminia Colón de Semidey, 59 P.R.R. 247; Baetjer v. District Court, 58 P.R.R. 426; Fleming v. Public Service Commission, 57 P.R.R. 1; Baetjer v. Court, 56 P.R.R. 570; Municipality v. Public Service Comm., 51 P.R.R. 362; White Star Bus Line v. District Court, 52 P.R.R. 809. See White Star Bus Line v. People of Puerto Rico, 75 F. 2d 889, 893, second column (C. A. 1, 1935). Cf. Russell & Co. v. Public Service Commission, 66 P.R.R. 355. It elected not to do so. After operating for more than eight years under these franchises, it cannot now raise as a defense to a suit by the People for collection of money questions as to their validity, the procedure used to fix them, and the amounts thereof. It was entitled to file at the appropriate time a proceeding in the district court for review of the provisions of the franchise to determine if they were “reasonable and in conformity with law”, § 83 of Act No. 70; Commission v. Havemeyer, supra; Godreau & Co., v. Public Service Comm’n, *553supra. See Montana-Dakota Utilities Co. v. Northwestern Public Service Company, 341 U. S. 246. Having failed to take this action, the defendant waived the contentions it now raises in defense of this suit for collection of money.

This case is unlike the Roig case, where the defendant refused to apply for a franchise and the People brought suit to enjoin it from operating without a franchise. Under those circumstances, Roig was entitled within the injunction suit to assail the constitutionality of Act No. 221 as applied to it. But here as we have seen the defendant applied for and obtained its franchises. It was therefore required to utilize the statutory method provided for review of any provisions of the franchise which it desired to challenge.4

The judgment of the district court will be affirmed.