Case Name: Public Service Commission, Second District, Appellant, v. Pavilion Natural Gas Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1921-02-28
Citations: 195 A.D. 534
Docket Number: 
Parties: Public Service Commission, Second District, Appellant, v. Pavilion Natural Gas Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 195
Pages: 534–539

Head Matter:
Public Service Commission, Second District, Appellant, v. Pavilion Natural Gas Company, Respondent.
Third. Department,
February 28, 1921.
Gas and electricity —• franchise fixing maximum rates for gas — power of -Legislature to change rates — powers of Public Service Commission — change above maximum cannot be made by company by giving notice to Public Service Commission and publication — Public Service Commissions Law, section 66, subdivisions 5 and 12, construed.
A stipulation in a franchise granted by a village to a gas company, fixing the maximum price which it will charge for gas furnished to the inhabitants of a village is a contract, but it is subject to the police power of the State and may be modified for the public welfare, and the Legislature has conferred this power on the Public Service Commission.
Subdivision 12 of section 66 of the Public Service Commissions Law does not authorize a gas company to change its rates above the maximum prescribed by its franchise by giving thirty days’ notice to the Public Service Commission and by publication for thirty days. Said subdivision applies to eases where a maximum rate is not fixed by the franchise contract or where the change is within the maximum, but where there is a maximum rate fixed in the franchise and the proposed rate exceeds it, subdivision 5 of section 66 applies.
Kilby, J., dissents, with opinion.
Appeal by the plaintiff, Public Service Commission, Second District, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Albany on the 27th day of May, 1920, upon the decision of the court, rendered after an inquiry at the Albany Special Term into the facts and circumstances as required by section 74 of the Public Service Commissions Law, dismissing plaintiff’s petition upon the merits.
Ledyard P. Hale, for the appellant.
James M. E. O’Grady, for the respondent.

Opinion:
Van Kirk, J.:
A stipulation in a franchise granted by a village to a gas company, fixing the maximum price which it will charge for gas furnished to the inhabitants of the village, is a contract; but it is a contract which is subject to the police power of the State and may be modified for the public welfare. The exercise of this power rests in the Legislature, which may confer the exercise of the power upon the Public Service Commission. The Legislature has conferred this power upon the Public Service Commission. (Pub. Serv. Comm. Law, § 66, subd. 5; Id. § 72;* People ex rel. Village of South Glens Falls v. P. S. Comm., 225 N. Y. 216, 223.) In this case the Public Service Commission has not exercised its power and the power has not been otherwise delegated by the Legislature than to the Public Service Commission.
The delegation of this power must be distinct and express. Subdivision 12 of section 66 of the Public Service Commis sions Law grants power to require every gas company to file its rates and charges made, and provides how such charges may be changed, but it does not purport to give the gas company power to change its franchise contract by simply giving thirty days' notice to the Commission and by publication for thirty days to the public. This would empower the gas company to change its rate by default and not under the police power of the Legislature, exercised directly or indirectly. It seems a perfectly consistent construction of the statute, giving effect to all its parts, to hold that subdivision 12 applies to cases where a maximum rate, for gas to be furnished to inhabitants of the village, is not fixed by the franchise contract, or where the proposed change is within the maximum rate; and that, where there is a franchise contract fixing such maximum rate, and the proposed rate exceeds it, subdivision 5 applies; otherwise one party to the contract would be authorized to change that contract without distinct and express authority from the Legislature. (Town of North Hempstead v. Pub. Serv. Corp., 193 App. Div. 224.)
The judgment should be reversed and a new trial granted, with costs to appellant to abide the event.
All concur, except Kiley, J., dissenting, with an opinion.
Since amd. by Laws of 1920, chap. 542.— [Rep.
Since amd. by Laws of 1920, chap. 542.— [Rep.