South Bend news-times. (South Bend, Ind.) 1913-1938, 1914-07-16
Judge RemSter of Marion Cir
cult Court Hands Down De-
CiSiOn Bearing on Local Con-
tract for Electricity.
CITY CAN BUY SERVICE
BUT CANNOT FIX RATES
Function Belongs to State UtiI-
ity C0mmiSSion-Suit Grows
Out of indianapolis Fight
With Light Companies
Special Correspondeuce.

Special Correspondents.
INDIANAPOLIS, JUL ia de-
cisiOn Of statewide Importance 10 mu-
inequalities, and having a direct bear
ing upon the case of South Bend
against the Indiana & Michigan Elec-
trio Co, with reference 10 lighting
contract entered into last winter be-
tween the city and the corporation
has just been decided by Judge Rem
ster Of the Marion county circuit
court lie holds that the city may
make such contracts, and that they
held good as to all questions except
as 10 the fixing Of rates.
The decision was made on the de-
murrer Of the Merchants Heat &
Light Co. Of indianapolis to a COM
plant by Herbert II. Rice for the In
dianapolis Heat & Light Co, asking
10 have a 1O-year street lighting con-
tract between the city Of Indianap-
oils and the Merchants Heat & Light
Co. declared void.
The authority to fix the rate in such
contract, Judge Remster held, IS
lodged by law in the public service
commission, but that circumstance,
Judge Remster said, does not take
from the city the right TO enter into
contracts with public utility COM
panies leaving the question of the
rate 10 be approved by the commits
sion.
Contention OF Rice's Attorneys.
Attorneys for Rice took the position
that the city, in entering into a con-
tract with the Merchants Heat &
Light Co, had usurped the power of
the public service commission under
the provisions of the public utility
act. Counsel for the city conceded
i'm the argument that the city could
not finally fix the rate in the con-
tract, but that the contract would
have 10 be submitted TO the public
service commission that the rate set
out in the contract might be approved
or modified.
IL has been estimated that the city
will save approximately $720.OO0 dur
ing the life Of the contract If the rate
named in the contract is permitted TO
stand by the public service commits
sion.
Rice filed suit as a taxpayer and as
a consumer or electric current He
averred that the Merchants Heat q
Light Co. surrendered its franchise
with the municipality under the util
ity act. and had received an inde-
terminate permit 10 continue in bus
mess Therefore Rice charged, the
public service commission has eXclu-
sive control over the light company
concerning rates for either public or
private service. and that the entering
light company is an attempt to de-
prive the commission OF its legisla-
tive powers. Rice further charges
that the city and the light company
had no right TO enter into the con-
tract.
In an interesting discussion. Judge
Remster points out in his opinion
that il is well 10 take in considera-
tion the power Of the state and the
delegation Of the power of the state
over public utilities to municipalities.
Judge Rcmster's Discussion.
Originally" said Judge Remster,
call power over public utilities was
lodged in the state. BY this Is meant
that originally the state reserved un-
10 itself all power over public utilities.
Originally no municipality or other
subdivision Of the state for govern
mental purposes had any power over
any public utility. Originally only
the state could provide where. when
and how any public utility could op-
crate in the state. or In any Of the
Governmental subdivisions, and the
rate or rates for any product furnish
ed and service rendered.
"In order that the citizens might
have more localized elf-gOvernment
in certain limited respects, the state
delegated 10 such municipalities the
exercise OF a certain defined amount
prised within such municipality.
Power Delegated tO municipalities.
Among the powers thus delegated
20 the municipalities was that OF con-
troll over the public streets Within the
municipality This carried with II
certain duties and obligations on the
part OF the municipality. Likewise.
from time to time. the state delegat-
ed 20 municipalities the exercise of
certain OF its powers over public utih-
ties within the municipalities.
''Tt IS the belief Of the writer that
at no time has the state delegated 10
municipalities the power 10 fix rates
by legislative action. BY this is meant
that the power vested in the state TO
hx rates for public utilities has not
been delegated 20 municipal corpora
tions. so that such rates may be fixed
solely By enaCtments OF the legisla
tive body OF the municipality.
This was the situation when the
'Shiyely-Spencer utility commission
act was adopted by the legislature in
1913. This act is very comprehensive
In its scope pertaining 90 the Organi-
zation. management and control OF
public utilities II contains Isl sec
tions ard covers practically IS pages
OF the Acts Of 1919
Back 20 FIRST Principles.
by this act. % a certain and limit
ed extent. the policy OF the state with
reference 20 public utilities and 20 a
CONTINUED on PAGE TEN)