Case ID: ohio-st_98/html/0320-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J. Jones, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The City of Cincinnati v. The Public Utilities Commission.
    
      Municipal corporations — • Franchise-ordinance a contract, when — Regulation of price of gas — What statutes a part of contract — Sections 3982 and 3983, General Code, construed — Rights of city upon refusal by company to accept rates — ■Divisible and indivisible contracts — Jurisdiction of public utilities commission— Section '614-44, General Code, inapplicable — Constitutional law — Impairment of existing contracts.
    
    1. Where an ordinance is passed by a municipal corporation granting to a gas company the right for the term of twenty-five years to furnish natural gas for heating, lighting and power purposes through its mains and appliances in the streets and public places, on terms and conditions contained in the ordinance, which include a provision that the grant is subject to the right of the city to regulate the price of natural gas from time to time as provided by law, the acceptance of the ordinance by the company constitutes a valid contract, and the rights of the parties are to be determined by the contract itself.
    
      2. In such case the grant to the company is subject to and dependent on the right reserved to the city to fix the price of gas from time to time as provided by law.
    3. Statutes in force at the time a contract is made by a municipality enter into and become part of the contract. Its obligation is to be measured, and performance is to be regulated, by the terms and rules which they prescribe.
    4. By the provisions of Sections 3982 and 3983, General Code (Sections 2478 and 2479, Revised Statutes), two entirely different situations are contemplated and provided for: (a) By Section 3982 the city is given power 10¶ regulate the price of gas from time to time; (b) By Section 3983 it is provided that if the city fixes the price for a period not exceeding ten years, and the gas company assents thereto, the city shall not require it to furnish gas at a less rate during the period agreed on, not exceeding such ten years.
    5. In such case if the company does not assent to the rate fixed by the city for the period not exceeding ten years, the power of the city to regulate the price is as ample as if the ordinance contained no such provision. (State, ex rel., v. Ironton Gas Co., 37 Ohio St., 45, approved and followed.)
    6. The fixing of a rate for the first ten years of a franchise granted for twenty-five years by a city, which reserves to the city the right to regulate rates from time to time as provided by law, does not change the franchise contract nor exhaust the power of the city thereunder. The original agreement constitutes one entire contract and such action conforms to and carries out its provisions.
    7. The provisions of Section 614-44, General Code, were not intended to and do not apply to a contract made prior to the passage of that section and which, by its terms, does not expire for more than one year.
    8. A contract, .such as above described, which is passed in full compliance with authority expressly conferred, is protected by the provisions of Section 10, Article I of the Federal Constitution, that no state shall pass any law impairing the obligation of contracts.
    (No. 15798
    —Decided June 21, 1918.)
    Error to. the Public Utilities Commission.
    The Union Gas & Electric Company and The Cincinnati Gas & Electric Company in September, 1917, filed their complaint with the Public Utilities Commission, in which it is set forth that the council of the city of Cincinnati on August 20, 1917, passed an ordinance regulating the price to be charged for natural gas consumed. A copy of the ordinance was attached to the complaint. The companies complained that the price fixed by the ordinance for natural gas to be furnished for a period of ten years from and after the date thereof to the city of Cincinnati for street lighting and all other purposes and to private consumers at the rate of thirty-five cents per thousand cubic feet, with a discount of five cents per thousand cubic feet, making a net rate of thirty cents per thousand cubic feet, if paid at the office of the company within five days after the delivery of bill, is unreasonable and insufficient to yield reasonable compensation for the service, having due regard to the value thereof and of all the property of complainants actually used and useful for the convenience of the public. They state that they have not accepted the ordinance, but do consent to continue to furnish gas to the city and its inhabitants and to devote their property to such public use during the term fixed by said ordinance, or by the provisions of law. They práyed that the rate fixed by the ordinance be suspended; and the complainants, electing to charge the rate in force immediately prior to the taking effect of the ordinance and offering.to give an undertaking in such an amount as the commission may determine, prayed further that the commission proceed to fix and determine the just and reasonable rate to be charged and collected by the complainants.
    In 1905 the city of Cincinnati passed an ordinance granting a franchise to The Cincinnati Gas & Electric Company to furnish natural gas for heat, light and power purposes to public and private consumers through its s}''stem of gas mains, pipes, fixtures and appliances in the streets and public ways of the city and to occupy such streets and public places for the purposes stated.
    Paragraph 6 of the franchise ordinance contained the provision: “The grant herein made shall continue for twenty-five (25) years from and after the passage and acceptance of this ordinance, subject, however, to the right of the city to regulate the price of natural gas from time to time, as provided by law, and to purchase the plant and works of the gas company as reserved in its contract with said city in that behalf.”'
    The company duly accepted the franchise ordinance, and thereafter leased its .plant, pipes, contracts and franchise to The Union Gas & Electric Company, which has since been operating the same. On the 20th of August, 1917, the council of the city passed the ordinance referred to in the complaint, regulating the price to be charged for natural gas by the companies for ten years, and said ordinance was approved by the mayor on the 29th of August, 1917. Thereafter the companies filed the complaint as above stated with the Commission.
    The City on the 5th of October filed its motion with the Commission to dismiss the complaint on the ground that the Commission was without jurisdiction, for the reasons stated in the motion.
    This motion was overruled by the Commission, and on the application of the Company it made its order directing the Company to give an undertaking in the sum of .$250,000, without additional surety, upon their election to charge the rate in force immediately preceding the effective date of the ordinance. Motions for rehearing having been overruled, this proceeding in error was brought to reverse the orders of the Commission.
    Plaintiff in error contends that the Commission is without jurisdiction, for the reason that Sections 614-44 to and including 614-47, General Code, are unconstitutional and void, in violation of Section If of Article II of the Constitution, and have been repealed by the adoption of that section and of Sections 4227-1 to and including 4227-13, General Code; that its order permitting an undertaking without surety is unreasonable and unlawful, and that its refusal to dismiss the petition is unlawful because Sections 614-44 et seq., General Code, referred to, are in violation of Sections 4 and 5, Article XVIII of the Constitution, and impair the obligation of a contract, in violation of Section 10, Article I of the Constitution of the United States.
    
      Mr. Charles A. Groom, city solicitor; Mr. Saul Zielonka, city solicitor; Mr. Wm. Jerome Kuertz and Mr. Charles E. Weber, assistant city solicitors, and Mr. Powel Crosley, for plaintiff in error.
    
      Mr. Joseph McGhee, attorney general; Mr. C. A. Radcliffe; Mr. Lazvrence Maxzvell; Mr. Miller Outcalt and Mr. Lazvrence K. Langdon, for defendant in error.
   Johnson, J.

It is familiar law, not questioned, that when a municipal corporation by ordinance gives its consent that a natural gas company may enter the municipality, lay down its pipes therein and furnish gas to consumers upon terms and conditions imposed by the. ordinance, which are accepted in writing by the company, such action by both parties constitutes a contract and the rights of the parties thereunder are to be determined by the contract itself. East Ohio Gas Co. v. City of Akron, 81 Ohio St., 33; State, ex rel., v. Cincinnati Gas Light & Coke Co., 18 Ohio St., 263, 7th Syl.; Circleville Light & Power Co. v. Buckeye Gas Co., 69 Ohio St., 259; City of Columbus v. Columbus Gas Co., 76 Ohio St., 309; Interurban Ry. & Term. Co. v. City of Cincinnati, 93 Ohio St., 108, and City of Cleveland v. Cleveland City Ry. Co., 194 U. S., 517.

The passage of the ordinance in December, 1905, granting the right, for the term of twenty-five years, to the company to furnish gas for heating, lighting and power purposes to public and private consumers, through its mains and appliances in the streets, with the right to occupy the streets and public places with such appliances, and the acceptance of that ordinance by the company, constituted a valid and binding contract between the parties. The power of the city to make the grant, and its validity, are amply shown by the above cited authorities. That contract will, by its terms, expire in 1930.

The rights of the parties “are to be determined by the contract itself.” As shown in the foregoing statement, Section 6 of the contract provides that “the grant herein made shall continue for twenty-five (25) years from and after the passage and acceptance of this ordinance, subject, however, to the right of the city to regulate the price of natural gas from time to time, as provided by law.” The parties themselves stipulated that the grant to the company was dependent on and subject to that right of the city. The law then in force provided that the city might regulate the price of gas from time to time. At the time of the making of the contract in 1905, Sections 2478 and 2479, Revised Statutes, which are now Sections 3982 and 3983, General Code, were in effect. The pertinent por-' tions of those sections are as follows:

Section 3982: “The council of a municipality in which * * * natural or artifical gas companies * * * are established * * * may regulate from time to time the price which such companies may charge for * * * gas for lighting or fuel purposes, * * * for public or private consumption, furnished by such companies * * *. Such cornpanies shall in no event charge more for * * * natural or artificial gas * * * than the price specified by ordinance of council.”

Section 3983: “If council fixes the price at which it shall require a company to furnish * * * either natural or artificial gas to the citizens, or public buildings, or for the purpose of lighting the streets, * * * or for other purposes, for a period not exceeding ten years, and the company or person so to furnish such * * * gas assents thereto, by written acceptance, * * * the council shall not require such company to furnish * * * gas * * * at a less price during the period of time agreed on, not exceeding such ten years.”

These statutory provisions by operation of law entered into and became part of the contract. (Insurance Co. v. Leslie, 47 Ohio St., 409; Milwaukee Mechanics’ Insurance Co. v. Russell, 65 Ohio St., 230, 255, and 19 Cyc., 659.) The obligation of a contract is measured by the standard of the laws in force at the time it was entered into, and its performance is to be regulated by the terms and rules which they prescribe. 6 Ruling Case Law, 325.

It will be observed that by the sections quoted, two entirely different situations are contemplated and provided for, viz.:

First: By Section 3982 the city is given power to regulate the price of gas from time to time.

Second: By Section 3983 it is provided that if the city fixes the price of gas for a period of ten years, and the company assents thereto, the city shall not require it to furnish gas at a less price during the period agreed on, not exceeding such ten years.

In this case the parties themselves provided that the grant of the franchises and privileges to the gas company was dependent on the right of the city to regulate the price of gas from time to time, as provided by law. That is, the city could, under Section 3982, at any time during the twenty-five years, the life of the franchise, fix the price generally without fixing any definite period for which the rate should be in force; or it could, under Section 3983, at any time during the twenty-five years, fix a rate for a definite period not exceeding ten years, and, if the company assented thereto, the city could not reduce the price during that ten-year period. That procedure was followed in the.present case. After the contract was made in 1905, the city fixed a rate for a ten-year' period. This was assented to by the company, and after the expiration of that period, the city, pursuant to the terms of the franchise contract, fixed a price for another ten-year period. Thereupon the gas company filed its complaint with the public utilities commission. The fixing of the first ten-year rate, and its acceptance by the company, did not annul or change the franchise contract by which the grant of privileges was made to the company, nor did it exhaust the power reserved to the city to fix rates. Such action was in conformity to that contract and carried out its express terms. To give exclusive attention to the action of the parties in fixing the rate for the first ten years of the franchise period of twenty-five years is to disregard the provisions of the agreement upon which the grant of privileges to the company is made to depend.

Section 3982, General Code, is the section which confers the regulatory powers on the city. The only place in the statute in which the words “regulate from time to time” are found is in Section 3982, General Code (2478 Revised Statutes). Section 3983, General' Code (2479 Revised Statutes), is not a regulatory statute. It simply limits the term for which the city can fix the rate with the assent of the company. As above shown, both sections entered into and became part of the franchise contract itself. And Sections 3982 and 3983 are entirely consistent with each other.

In State, ex rel., v. Ironton Gas Co., 37 Ohio St., 45, it was decided that a provision in an ordinance fixing the price of gas for a certain period, if accepted by the gas company, precludes the city from lowering the price for the period named, but “If not thus accepted, the power of the council to regulate the price is as ample as if the ordinance contained no such provision.”

Notwithstanding this, if the city at any time should fix a rate which is so unjust or unreasonable and beneath a proper compensatory return as to amount to a taking of the property of the company without just compensation, it would have recourse to the courts for the protection of its rights and property. Mo. Pac. Ry. Co. v. Tucker, 230 U. S., 340, 347; Newark Nat. Gas & Fuel Co. v. City of Newark, 92 Ohio St., 393, and Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234.

Suppose the company had not assented to the rate fixed by the city for the first ten-year period, in that event the power of the city would have been as ample as if no period had been fixed; and when the company did not assent to the rate fixed by the city for the second ten-year period, the power is equally ample. State v. Ironton Gas Co., supra.

In Freeport Water Co. v. Freeport City, 180 U. S., 587, the water company was given the exclusive right to supply the city with water for thirty years, subject to certain terms and conditions named in the ordinance, which also contained provisions for the payment of water rates by consumers. In discussing the power of the municipality to make regulations the court say at page 599:

“An example is afforded by the act of June 6, 1891. By that act the corporate authorities of any city which have authorized or shall authorize any individual, company or corporation to supply water, ‘be and are hereby empowered to prescribe'by ordinance maximum rates and charges for the supply of water furnished by such individual, company or ' corporation. . . . There is no explicit provision for repetitions of the power — none declaring the power conferred a continuing one. Who now doubts that it is ? If rights were claimed and were pleading for a different interpretation we might have to listen to them, but now undisturbed by them we yield without resistance to-that meaning which the subject-matter demands in the absence of negativing words.

“Our conclusion is that the powers conferred by the statutes of 1872 can, without straining, be construed as distributive. The city council was authorized to contract with any person or corporation to construct and maintain waterworks ‘at such rates as may be fixed by ordinance, and for a period not exceeding thirty years.’ The words ‘fixed by ordinance,’ may be construed to mean by ordinance once for all to endure during the whole period of thirty years; or by ordinance from time to time as . might be deemed necessary. Of the two constructions that must be adopted, which is most favorable to the public, not that one which would so tie the hands of the council that the rates could not be adjusted as justice to both parties might require at a particular time.”

Some years after the making of the contract, to-wit, in May, 1911, Sections 614-44 to and including 614-47, General Code, were enacted. These sections permit an appeal to the public utilities commission from ordinances of municipalities fixing rates for any commodity, utility or service.

It is contended that as this law was in effect in August, 1917, when the council passed the ordinance fixing the thirty-cent rate, the commission was authorized to entertain the complaint filed by the companies. The pertinent part of Section 614-44, General Code, is as follows: “Any municipal corporation in which any public utility is established, may, by ordinance, at any time zvithin one year before the expiration of any contract entered into under the provisions of sections 3644, 3982 and 3983 of the General Code between the municipality and such public utility with respect to the rate, * * * to be made * * * for any commodity * * * by such public utility, * * * proceed to fix the price * * * that such public utility may charge * * * for an ensuing period, as provided in sections 3644, 3982 and 3983 of the General Code.” Then follow the provisions for the filing of a complaint with the commission by dissatisfied parties.

The ordinance complained of in this case was not passed “at any time within one year before the expiration of any contract * * * between the municipality and such public utility with respect to the rate.”

We think it clear that a contract, made between a municipality and a public utility, in full compliance with express statutory provisions, before the passage of Section 614-44, General Code, is not affected by the provisions of that section, and that no steps can be taken under Section 614-44 et seq. until within one year of the expiration of the contract. A different construction would violate the express terms of the contract between the parties in 1905, in which the company agreed that the city should have the power to fix the rates. For by the provisions of Section 614-44 et seq. it is provided that the commission may fix the rates to be charged, on a hearing of the complaint permitted to be filed with it.

There is not only nothing in Section 614-44 et seq. to indicate that the legislature intended to interfere with or abrogate valid contracts already in existence, but there is the express language we have quoted which demonstrates that there was no such intention. The purpose was that the new law should be put into operation as to contracts about to expire and those thereafter made.

Section 614-44 not only confers-upon the public utility the right to invoke the jurisdiction of the public utilities commission, when not satisfied with the price fixed by the municipality, but it also enables electors of the municipality (even if the public utility accepts the rate) to invoke the same jurisdiction; and the commission on the hearing may lower the rate paid to the company.

The parties had the right to make the contract and to rely on the enforcement of it as they made it. Who can say that the city or the company would have entered into the contract if they had realized that a board or commission not then contemplated might without their consent be after-wards created, by which an essential element might be altered? ' As was said by Judge Spear in City of Wellston v. Morgan, 59 Ohio St., 147, 157: “The paper presented undertakes to stipulate for the furnishing of light and an agreed price therefor, for ninety-nine years. The proposition is that we now treat it as a contract for ten years; that is, that the court shall make a new contract for the parties for ten years, and then enforce it. How • can we say that the company would have incurred the great expense and outlay of money and labor, which the petition declares was incurred, for the period of ten years only ? And if the court were of opinion that probably the company would have been willing to so contract, where is there any authority in the court to now alter the terms that they did agree upon and then enforce them as changed ?” In that case the court say in the syllabus: “The only semblance of a contract between the City and the electric light company was in the form of an ordinance passed by the council, which undertook to grant to the company the exclusive use of the streets for the erection of its poles, et cetera, for the period of ninety-nine years, and to bind the City to purchase light of the company during that time at a stated sum per month.”

The contract of 1905, in the present case, having been entered into by the city in the exercise of contractual capacity and authority expressly conferred upon it, and having conferred upon the company valuable privileges and rights in the public streets and places of the city on the conditions named therein, is protected by the provisions of Section 10, Article I of the Federal Constitution, that no state shall pass any law impairing the obligation of contracts. A franchise is included within the broader term grant, and the same general principles are applicable to it in reference to the constitutional inhibition as to the impairment of the obligation of contracts. 6 Ruling Case Law, 340; 12 Corpus Juris, 1009, and Cleveland v. Cleveland City Rd. Co., 194 U. S., 534.

It is urged that the creation of the public utilities commission is expressly authorized by Section 2, Article XIII of the Constitution, as adopted in 1912.

This court, in the exercise of its revisory jurisdiction under Section 2, Article IV of the Constitution, has given full recognition to the power and jurisdiction of the public utilities commission, and to the efficient aid it has given as an administrative agency of the government, but it is neither advisable nor possible to confer upon it power in disregard of rights protected by the guaranties of the constitution.

In Gunn v. Barry, 15 Wall. (82 U. S.), 610, it was held that a state can no more impair an existing contract by a constitutional provision than by a legislative act. Both are within the prohibition of the national constitution.

Counsel also urge that the right to establish rates by compulsion is distinguished from the power to contract for a rate; that the power of a municipality to regulate is a police power, and rests upon legislative grant, which may be modified by the legislature at will.

We are mindful that the police power is an essential and vital attribute of government to be exercised in the interest of the public health, safety and welfare. Government cannot, even if it would, divest itself of this inherent incident of sovereignty. The duty of its watchful exercise is a continuing one. But here is a matter of contract. It expresses a meeting of minds on a subject which the parties were competent to contract about. The situation is one in which the city had been expressly given full power by the state to enter into an agreement touching all the matters covered by the terms of the contract, and, conceding that the grant of power to the city was subject to repeal or modification at the will of the legislature, no such modification had been made at the time the contract became binding on the parties.

As was said by the supreme court of the United States in Cleveland v. Cleveland City Railroad Company, supra, page 534:

“That in passing ordinances, based upon the grant of power referred to, the municipal council of Cleveland was exercising a portion of the authority of the State, as an agency of the State, cannot in reason be disputed. If, therefore, the ordinances passed after August, 1879, and referred to previously, which ordinances were accepted by the predecessors of the complainant, with whom it is in privity, constituted contracts in respect to the rates of fare to be thereafter charged upon the consolidated and extended lines (affected by the ordinances) as an entirety, it necessarily follows that the ordinance of October, 1898, impaired these contracts.

“The question for decision then is Did the consolidated ordinance of February, 1885, and the ordinances thereafter passed and accepted, already referred to, constitute binding contracts in respect to the rates of fare to be thereafter exacted upon the consolidated and extended lines of the complainant ?

“That in the courts of Ohio the acceptance of an ordinance of the character of those just referred to is deemed to create a binding contract is settled.”

It was held in the above case that a consolidated ordinance of February, 1885, of the city, and ordinances thereafter passed by the municipality and accepted by the companies, constituted such binding contracts in respect to the rate of fare to be exacted on the lines of the company as to deprive the city of its right to exercise the reservations in the original ordinances as to changing rates of fare, and that the ordinance of October, 1898, reducing fare to be charged was void and unconstitutional within the impairment clause of the federal constitution. In the cases of Cincinnati v. Pub. Util. Comm., 96 Ohio St., 554, and 96 Ohio St., 270, the questions determined in this case were not presented to the court.

Counsel for defendant in error cite State, ex rel. Webster, v. Superior Court, 67 Wash., 37, in which case it was held that a city which granted a franchise to a telephone company, fixing rates, could not attack the constitutionality of a public utilities act passed thereafter, under which the rates were raised, on the ground that the contract in the franchise was impaired thereby. In that case, the case of Cleveland v. Cleveland City Rd. Co., supra, was relied on by counsel for the city. But the supreme court of Washington point out that in the Cleveland Railroad case express authority had been conferred on the city by the Ohio statute, while, in the

Washington case, the power to fix rates was a right reserved to the legislature of the state by the constitution of that state and so was not incident to a freehold charter. See also Woodburn v. Public Service Commission, 82 Ore., 114, which is likewise cited by the defendant in error, where it was also held that the right was reserved to the state.

As we have seen, the state and federal courts have held that in Ohio “express and unmistakable authority” was conferred on the city to make a contract, such as is involved here, and during the life of the contract the parties operating under it are bound by its terms.

These views as to the contractual relations of the parties, whose interests are concerned in the proceeding, are conclusive of the case, and it is not necessary to decide the other questions suggested.

The order of the commission will be reversed.

Order reversed.

Nichols, C. J., Wanamaicer and Newman, JJ., concur.

Jones, J.,

dissenting.

I find it impossible to concur in the judgment. The municipality seeks to avoid the jurisdiction of the public utilities commission of the state because the original franchise ordinance contained a stipulation subjecting the utility “to the right of the city to regulate the price of natural gas from time to time, as provided by law.”

This ordinance was passed December 26, 1905, The legislative grant to the municipality limited the contractual period to ten years. After the ten-year period the city by ordinance attempted to impose a compulsory rate of service upon the grantee, ignoring the ad interim legislation, which had in the meantime placed the control of rate regulation in the hands of the public utilities commission.

1. The original ordinance of 1905, to which the grantee gave its statutory assent, reserved to the city the right to regulate the price of natural gas from time to time, as provided by law. This could only mean as provided by law in force at the time the regulation was to be made; otherwise this provision would be meaningless. Before the new reducing rate ordinance of August 20, 1917, was passed, the legislature had-in the meantime provided by law the method by which the price of natural gas should be established. When the city attempted to enforce its unilateral and compulsory rate provision in its new ordinance it violated its original contract made with the utility.

2. If it is assumed that this contract was for a longer period than ten years, the answer to that contention is that the municipality had no legislative authority to make it.

Sections 3982 and 3983, General Code, which were in force at the time the original ordinance was adopted, granted the only power the municipality had touching rate regulation. The first section delegates the power to city councils to regulate, and the second section provides for the contractual relation between the city and company, which shall not extend beyond a period of ten years. Under these sections neither the city nor the utility had any authority to contract as to the price of gas for a longer period.

In construing a similar section relating to price regulation this court held in the case of City of Wellston v. Morgan, 59 Ohio St., 147, as follows: “Where a statute gives power to a municipal corporation to contract for the lighting of its streets and other public grounds for a period not exceeding ten years, the conclusive implication is that such corporation is forbidden to contract for a longer period.”

In construing the grant of legislative power in the two code sections noted, in the case of Logan Nat. Gas & Fuel Co. v. City of Chillicothe, 65 Ohio St., 186, the following proposition is stated in the syllabus: “A city council has no power under Revised Statutes, Sections 2478 and 2479 [now Sections 3982 and 3983, General Code], to compel a gas company, without its assent to the ordinance, to furnish gas in a manner and at a rate entirely at the option of the consumer.” And on page 206 the court say: “It is also provided that if the gas company assent to such limitation in writing it then becomes a binding obligation on both the city and the company for ten years and no more. This is the extent of the authority granted to the council, and no other or different power is either expressed or implied. ' When, therefore, the council undertakes, even in the absence of a prior ordinance, to compel the gas company without its consent to furnish gas in a manner and at a rate entirely at the option of the consumer, it not only transcends the power conferred by the legislature, but it also undertakes to seize private property without due process of law.”

It must be remembered that the only power given to municipalities by Section 3983, General Code, was regulation by contract; and not a compulsory regulation. In this connection the statement of the Oregon supreme court in the case of Woodburn v. Public Service Commission, 82 Ore., 114, 127, L. R. A. (C. 1917), 98, 105, is peculiarly apt: “The right of the state to regulate rates by compulsion is a police power, and must not be confused with the right of a city to exercise its contractual power to agree with the public service company upon the terms of a franchise. The exercise of a power to fix rates by agreement does not include or embrace any portion of the power to fix rates by compulsion.”

3. Since municipalities are political subdivisions of the state and mere agents of the latter, it is within the province of the state to change its rate regulation at will before the municipality has entered into a legal and effective contract with a public utility. Before the ten-year, period of limitation had expired, and before the city had assumed to renew its status with the utility, and prior to municipal action fixing the new rate, the legislature had created a public utilities commission and vested it with sole control over coercive rate regulation. That the legislature had ample power to do this is supported by overwhelming authority, especially in view of the provisions of Section 2, Article XIII of the Constitution, which reserved to the legislature the right to alter or repeal laws conferring corporate franchises. People, ex rel., v. Public Service Commission, 153 App. Div., 131; Richmond Co. Gas-Light Co. v. Middletown, 59 N. Y., 228; Stanislaus County v. San Joaquin C. & I. Co., 192 U. S., 201, and Home Tel. Co. v. Los Angeles, 211 U. S., 265.

4. The new rate ordinance was passed by the council of the city of Cincinnati on August 20, 1917. The city is now assuming an attitude wholly inconsistent with its former action. Prior to the passage of the new ordinance the city had expressly recognized the jurisdiction of the public utilities commission of the state to control the rate regulation of this public utility.

In the case of the City of Cincinnati v. Public Utilities Commission, 96 Ohio St., 554, the city itself invoked the jurisdiction of the commission by adopting a resolution on February 10, 1914, requesting the commission to investigate and ascertain the value of this public utility for rate-making purposes. This proceeding was brought under Section 499-8 et seq., General Code, which authorized the commission to fix the valuation “for the purpose of ascertaining the reasonableness and justice of rates and charges for the service rendered by public utilities,” etc. In that case, at the instance of the city, this court rendered a judgment in its favor, modifying the order of the commission in the matter of valuation upon which rates are necessarily based.

Likewise, in the case of City of Cincinnati v. Public Utilities Commission, 96 Ohio St., 270, the city also recognized the authority of the commission to deal with rates of this utility during the non-contractual period, for, after the expiration of the ten-year gas-rate contract in controversy, the city applied to the commission asking it to fix an emergency rate for this utility. It may not be amiss to say that in the opinion in the above case it is suggested that the ordinance of December 26, 1905, was not a twenty-five-year but a ten-year contract, expiring October 26, 1916, by virtue of Section 3983, General Code, and that such rate contract becomes operative “upon its acceptance by the public utility.”