ity has the right to make a contract with a public service company as to the use of its streets, where such use has not been granted by the state itself; and in consideration of granting the use of the streets to such a company, it may compel it to agree not to charge in excess of certain fixed rates. Such a contract is within the power of the municipality, without any express delegation of power, and is binding as to rates not only upon the municipality but also upon the company, at least until the state, through its legislature or the public service commission, changes the rates. Accordingly, where a municipality grants the right to use streets for gas pipes, it may provide that the charge for gas furnished the city and its inhabitants shall not exceed certain prices, without regard to whether the municipality has power to "regulate" the rates of the company.5 So a telephone company may be granted the use of streets on the condition that the rates shall not exceed a fixed schedule "or" those fixed by any future ordinance. Likewise, a statute authorizing a municipality to grant to a corporation the privilege to exercise its public utility franchise therein "upon such terms and subject to such rules and regulation and the payment Vermont. See Barre v. Barre & M. Power & Traction Co., 88 Vt. 304, 92 Atl. 237. In Louisiana, although there is no express legislation authorizing mu nicipalities to establish rates for street railroads by contract, "such power necessarily flows from the statutory prohibition that no railroad shall be constructed through the streets of any incorporated city without the consent of the municipal council thereof, and from the general power of regulating the use of the streets." Shreveport Traction Co. v. Shreveport, 122 La. 1, 129 Am. St. Rep. 345, 47 So. 40; Forman v. New Orleans & C. Co., 40 La. Ann. 446, 4 So. 246. A constitutional provision prohibiting the legislature from passing any "law impairing the obligation of contracts or making any irrevocable grants of special privileges or immunities" does not preclude the city from making an irrevocable contract regarding rates of a public service corporation. Omaha Water Co. v. Omaha, 147 Fed. 1, 6, 12 L. R. A. (N. S.) 736, 8 Ann. Cas. 614. But it has been held that the power of a municipality to contract for a supply of water is to be distinguished from the power to fix absolute rates to be charged for it during the term of the contract. The former does not include the latter. Birmingham Waterworks Co. v. Birmingham, 211 Fed. 497, 501. A franchise contract limiting the right of a street railway to a five cent fare is applicable to territory subsequently annexed, so as to require it to carry passengers within the annexed territory for five cents. Indiana R. Co. v. Hoffman, 161 Ind. 593, 69 N. E. 399; State v. Seattle, R. & S. R. Co., 64 Wash. 167, 116 Pac. 638. 5 Noblesville v. Noblesville Gas & Improvement Co., 157 Ind. 162, 60 N. E. 1032; La Crosse v. La Crosse Gas & Electric Co., 145 Wis. 408, 130 N. W. 530. 6 Moberly v. Richmond Tel. Co., 126 Ky. 369, 103 S. W. 714. of such license fees as the common council may prescribe" authorizes such use to be conditioned upon prescribed rates for service." So a statute granting exclusive power to a municipality over its streets confers on it authority to fix the rates, on permitting a public service company to use the streets. Moreover, it is held that a municipality given authority to establish reasonable rules and regulations, even though it does not possess authority to exclude a company from the use of its streets, may fix by ordinance a maximum rate of charges, which becomes binding when the ordinance is accepted by the company, where a valuable consideration passes to the grantee of the franchise in the agreement as to rates. Statutes sometimes expressly authorize municipalities to fix rates.10 While the legislature has authority to delegate to municipalities the power to bind themselves by an irrevocable contract not to regulate the rates of a public service company for a term of years, yet a statute will not be construed as granting such authority in the absence of express words or necessary implication.11 8 4474. Company as precluded from denying power to contract or reasonableness of rates. If the rates to be charged, or the maximum rates, are fixed by the grant of the franchise to use the streets, as a condition of granting the franchise, and the franchise is accepted by the company, it cannot thereafter deny the power of the municipality to make the agreement, where the company obtained rights and privileges from the municipality which it otherwise would not have had.12 So if a public service company, by its franchise, agrees to certain rates, it cannot thereafter claim that such rates are unreasonable and confiscatory.18 On the other hand, it has been held that Ross, 125 N. Y. App. Div. 76, 109 N. "Having accepted the grant the grantee accepted all its terms, and cannot deny the town's power to fix rates by contract." St. Mary's v. Hope Natural Gas Co., 71 W. Va. 76, 78, 43 L. R. A. (N. S.) 994, 76 S. E. 841. 13 Charles Simon's Sons Co. V. Maryland Telephone & Telegraph Co., 99 Md. 141, 63 L. R. A. 727, 57 Atl. 193; Boerth v. Detroit City Gas Co., 152 Mich. 654, 18 L. R. A. (N. S.) 1197, 116 N. W. 628; Condon v. New Rochelle Water Co., 116 N. Y. Supp. an agreement as to rates, contained in a franchise to use the streets, where the right to use the streets is conferred by charter or statute, is void for want of consideration.14 § 4475. Penalties for violation of rate laws. The state has the undoubted right to enforce its rate regulations, the same as other regulations,15 by imposing penalties for violation thereof, provided such penalties are reasonable and not such as to practically preclude the right of the companies affected to resort to the courts to test the validity of the rates.16 § 4476. Right to recover back rates paid in excess of rate fixed. It is too well settled to require citation of authorities that a shipper who has been compelled by a carrier to pay rates in excess of those fixed by law may recover the excess as a payment made under compulsion, and this is also true as to payment of excessive rates demanded by other companies whose rates have been fixed by law. B. Who May Regulate Rates § 4477. United States. The federal government, as a part of its power to regulate commerce, may regulate the interstate rates of corporations engaged in interstate commerce.17 This power, however, has been delegated to the Interstate Commerce Commission. As originally enacted, the Interstate Commerce Act conferred no power upon the commission to fix rates, but the power to prescribe a rate was conferred by the 1906 amendment known as the Hepburn Act. While it has no power, of its own motion, to prescribe rates in the first instance, yet it has the power, upon complaint being made that certain rates are unreasonably high or low, to examine the matter, and to fix a new and reasonable rate if it finds the existing rate to be unreasonable.18 The Interstate Commerce Commission was created by Congress to promote and facilitate commerce. It exercises administrative powers but has no judicial powers, although it exercises a quasi judicial power. Regulations in violation of express federal statutes are void. 19 Fed. 190. See also § 4427, supra. 142, aff'd without opinion in 136 N. Y. App. Div. 897, 120 N. Y. Supp. 1119. 14 Macklin v. Home Tel. Co., 24 Ohio Cir. Ct. 446. 15 See § 4425, supra. 16 In re Young, 209 U. S. 123, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764; In re Wood, 155 17 Shepard v. Northern Pac. Ry. Co., 184 Fed. 765. 18 Interstate Commerce Commission v. Union Pac. R. Co., 222 U. S. 541, 56 L. Ed. 308; Illinois Cent. R. Co. v. Interstate Commerce Commission, 206 U. S. 441, 51 L. Ed. 1128. 19 See Capital Traction Co. v. King, While the commission is not given power to fix intrastate rates, yet it is held that it may regulate such rates where so related to interstate rates and so unreasonable that they discriminate against interstate commerce,20 or may fix a rate between two points in a state in dealing with such rate as a part of an interstate rate made up of two or more local rates combined.21 Its authority with reference to intrastate rates is purely incidental and remedial.22 § 4478. State. Even so far back as 1853 the state of New York fixed the maximum fare for passengers on the line of the New York Central at two cents a mile and this rate has continued to the present day. It is too well settled to require an extensive citation of authorities that the legislature, either directly, or by delegation of authority to an appropriate agency, has power to fix rates for public service companies and the like, provided such rates are not confiscatory and do not violate other constitutional prohibitions.23 Moreover, the power of the state extends to the rates of a railroad company created by an act of Congress, where there is nothing in the act to indicate an intent by Congress to remove such corporation from state control.24 And as early as 1884 the Supreme Court of the United States held that a state could regulate intrastate rates of interstate railroads,25 and it is now settled law that a state has full power to regulate railroad rates between points solely within the state.26 The regulation of prices to be charged by a corporation intrusted with a franchise of a public utility character is within the sovereign power of the state that grants the franchise or that suffers it to be exercised within its borders, as a part of its police power,27 unless for 44 App. Cas. (D. C.) 315, provision as to speed of street cars in city of Washington. 20 Houston, E. & W. T. R. Co. v. United States, 234 U. S. 342, 58 L. Ed. 1341, aff'g 205 Fed. 380. 21 Baer Bros. Mercantile Co. V. Denver & R. G. R. Co., 233 U. S. 479, 58 L. Ed. 1055, rev'g 187 Fed. 485. 22 Eastern Texas R. Co. v. Railroad Commission of Texas, 242 Fed. 300, 307. 23 Seward v. Denver & R. G. R. Co., 17 N. M. 557, 46 L. R. A. (N. S.) 242, 131 Pac. 980; Frank A. Graham Ice Co. v. Chicago, M. & St. P. R. Co., 153 Wis. 145, 140 N. W. 1097. 24 Ames v. Union Pac. Ry. Co., 64 Fed. 165. VII Priv. Corp.-29 25 Stone v. Farmers Loan & Trust Co., 116 U. S. 307, 29 L. Ed. 636. 26 State Public Utilities Commission of Illinois v. Atchison, T. & S. F. R. Co., 278 Ill. 58, 72, 115 N. E. 904. 27 Danville v. Danville Water Co., 180 Ill. 235, 54 N. E. 224; State v. Missouri & K. Tel. Co., 189 Mo. 83, 88 S. W. 41; Bluefield Water Works & Improvement Co. v. Bluefield, 69 W. Va. 1, 33 L. R. A. (N. S.) 759, 70 S. E. 772; Madison v. Madison Gas & Electric Co., 129 Wis. 249, 264, 8 L. R. A. (N. S.) 529, 116 Am. St. Rep. 944, 9 Ann. Cas. 819, 108 N. W. 65. bidden by the state constitution, but such power may be with wisdom and propriety delegated to a municipal corporation,28 or to a public service commission.29 This power to regulate rates is sometimes conferred on the legislature by express constitutional provisions, but the power need not be so conferred, since it is inherent in the legislature. However, the power is limited by the provisions of the Federal Constitution as to due process of law and impairment of contracts, and hence the rates fixed are invalid if confiscatory or if they impair the obligation of a contract,30 In Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77, the leading case in this country, which was in regard to regulating the charges of grain elevators, it was held that "in England from time immemorial, and in this country from its first colonization, it was customary to regulate ferries, common carriers, hackmen, bakers, millers, public wharfingers, auctioneers, innkeepers, and many other matters of like nature, and, where the owner of property devotes it to a use in which the public has an interest, he, in effect, grants to the public an interest in such use, and must to the extent of that interest submit to be controlled by the public. Probably the most familiar instances with us are the public mills, whose tolls are fixed by statute, and railroad, telegraph, and telephone companies, for the regulation of whose conduct and charges there is a state commission, established by law." There have been reiterated decisions in the United States Supreme Court and in the several states affirming the doctrine laid down in Munn v. Illinois as to every class of interest affected with a public use; among others, water companies. Spring Valley Water Works v. Schottler, 110 U. S. 347, 28 L. Ed. 173; Griffin v. Goldsboro Water Co., 122 N. C. 206, 41 L. R. A. 240, 30 S. E. 319. Constitutionality of statute limiting fares of street railway company to three cents, see Indianapolis v. Navin, 151 Ind. 139, 41 L. R. A. 337, 51 N. E. 80, 47 N. E. 525. 28 Rogers Park Water Co. v. Fergus, 180 U. S. 624, 45 L. Ed. 702, aff'g 178 Ill. 571, 53 N. E. 363; San Diego Land & Town Co. v. National City, 174 U. S. 739, 43 L. Ed. 1154, aff'g 74 Fed. 79; Los Angeles City Water Co. v. Los Angeles, 88 Fed. 720; Chicago Union Traction Co. v. Chicago, 199 Ill. 484, 523, 59 L. R. A. 631, 65 N. E. 451; Danville v. Danville Water Co., 180 Ill. 235, 54 N. E. 224; Rogers Park Water Co. v. Fergus, 178 Ill. 571, 53 N. E. 363, aff'd 180 U. S. 624, 45 L. Ed. 702; Tipton v. Tipton Light & Heating Co., 176 Iowa 224, 157 N. W. 844; State v. Missouri & K. Tel. Co., 189 Mo. 83, 88 S. W. 41. In any event, where the charter of a public service company contains a provision expressly subjecting it to alteration, modification or repeal by any future legislature, the reserved power may be delegated by the legis lature to the city council, so far as the power to regulate the rates of the company is concerned. State v. Cincinnati Gas-Light & Coke Co., 18 Ohio St. 262, 298. 29 See infra, next section. 30 See 88 4485-4497, infra. |