Court Opinion

ID: 6979452
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:16:56.422924+00
Date Added: 2024-06-11T16:09:07.929978
License: Public Domain

Dunn, C. J., Cartwright and Farmer, JJ., dissenting: In operating an electric light plant and selling electricity to individuals the city is not exercising its governmental powers but its private or proprietary rights, and its duties and liabilities are the same as those imposed by law upon individuals engaged in the same business. It was so held in regard to the furnishing of water and gas in Wagner v. City of Rock Island, 146 Ill. 139, where we said (p. 154) : “A municipal corporation which supplies its inhabitants with gas' or water does so in its capacity of 'a private corporation and not in the exercise of its powers of local sovereignty. If this power is granted to a borough or city it is a special private franchise, made as well for the private emolument and advantage of the city as for the pub-lie good. In separating the two powers, public and private, regard must be had to the object of the legislature in conferring them. If granted for public purposes exclusively they belong to the corporate body in its public, political or municipal character; but if the grant was for purposes of private advantages and emolument, though the public may derive a common benefit therefrom, the corporation quo ad hoc is to be regarded as a private company. It stands upon the same footing as would any individual or body of persons upon whom the like special franchises had been conferred.” (City of Chicago v. Selz, Schwab & Co. 202 Ill. 545; Village of Palestine v. Siler, 225 id. 630.) In Butler v. Karb, 96 Ohio St. 472, it is said: “That neither public nor private corporations may discriminate between members of the public with reference to rates and terms of service does not longer admit of controversy. This wholesome rule, long in force, has had frequent application, particularly to common carriers and utilities companies. A municipality operating a utility is not exempt therefrom. Acting in a proprietary capacity, we have seen, it should have the freedom of action of a private utility corporation, but it is also subject to the same restrictions as to practices of discrimination in rates and service.” So far as a municipality is engaged in the commercial distribution of electricity, its rights and liabilities, powers and duties are measured by the same standard and governed by the same rules as apply to private corporations similarly engaged. There is no doubt that the exception of municipalities owning or operating public utilities from the operation of the Public Utilities act, which applies to every other corporation, company, association or individual, grants to such corporations a special privilege which such other corporations do not enjoy, and is therefore obnoxious to the provision of the State constitution against special laws unless there exists some reasonable basis, having reference to the object of the legislation, for placing such municipalities in a class by themselves. The constitutional provision does not mean that the same rule shall apply to every individual in the State under all circumstances but only under substantially the same circumstances, and laws may be valid though operating only upon particular persons or classes of persons if there is a valid reason for such particular operation. An arbitrary designation of persons is not permissible. The only reason which is recognized as valid is a substantial distinction which differentiates in important particulars, having some reasonable and just relation to the purpose of the law, the particular persons to whom it applies from all other persons. People v. Kewanee Light Co. 262 Ill. 255. A municipal corporation has no authority either to sell electricity to private consumers or to fix the rate at which it shall be sold within the municipality in the absence of a statute enabling it to do so. In June, 1913, the General Assembly passed and the Governor approved a law which went into effect on July 1 and gave to any city in the State the power to acquire, construct, own and operate any public utility the product or service of which, or a major portion thereof, is or is to be supplied to the city or its inhabitants, and to contract for, purchase and sell to private persons or corporations the products or service of such utilities and to fix the rates and charges for the services rendered by such public utilities. (Laws of 1913, p. 455.) This statute does not confer authority for the regulation of public utilities upon municipalities. At the same session of the legislature another law was enacted which became effective on January 1, 1914, and is known as the Public Utilities act. (Laws of 1913, p. 459.) This act created a Public Utilities Commission, to which it gave the general supervision of all public utilities and upon which extensive powers of regulation were conferred. Among many other things every public utility was prohibited from undertaking to perform any service or furnish any product or commodity unless or until the rates and other charges and classifications, rules and regulations relating thereto, applicable to such service, product or commodity, have been filed and published in accordance with the provisions- of the act. Such rates, charges or classifications, or any rule, regulation, practice or contract relating to or affecting any rate or other charge, classification or service, cannot be changed, unless the commission otherwise orders, except after thirty, days’ notice to the commission and to the public; no increase in any rate or charge can be made except upon a showing before the commission and a finding by it that such increase is justified, and no greater or less rate can be charged for any product or service than that specified in the schedule at the time filed and in effect. Section 10 contained the clause which has been referred to, defining the term “public utility” and excepting utilities owned by municipalities from the definition. There is no doubt that the legislature intended that public utilities owned or operated by municipalities should not be under the supervision of thé Public Utilities Commission or subject to its authority. There is no reason to suppose that this exemption was limited only to the operation of the utility in furnishing its product and service for the use of the municipality and did not extend to the entire operation. On the contrary, there was no occasion'd} except an electric light plant, .for instance, which a city operated only for lighting the streets and public places and property and which had nó private consumers. There was no need of all the detailed requirements of the Public Utilities act in the case of a municipality which is the only consumer of the product of its plant. The exception applies to utilities owned by municipalities and operated commercially. The purpose of the Public Utilities act was the prevention of extortionate charges and unjust discriminations by public utilities. The authority to regulate public utilities is vested in the legislature, which may exercise it directly or through such governmental agencies as it may deem best. It might have given to each city in the State the power to regulate the rates to be charged by public utilities for their services, respectively, within the municipality. It did not do this but.it enacted a law authorizing each city to enter upon the commercial business of operating public utilities and to fix its own rates, and it is not contended that this was beyond the legislative power. The Public Utilities act, though passed at the same session, did not go into effect until six months later, and if there is any inconsistency between them the later act must prevail. This act placed all public utilities under the supervision of the commission, and if the exception of utilities owned or operated by a municipality cannot be given effect the acts are inconsistent. The one gives the Public Utilities Commission supervision of the business of public utilities and control of rates, while the other gives the municipality the entire supervision and control of the business of any public utility it may own and the regulation of its rates and charges. The effect of the two statutes is that public utilities engaged in commercial operation are divided into two classes, — that is, those owned by a municipality and all others. The former have the privilege of operation without restriction or supervision by thé State; the latter have not but must operate under the supervision and control of the Public Utilities Commission. Is the difference of ownership a reasonable basis, having reference to the purpose of the legislation, for the difference in privilege? So far as this question is concerned there is no difference in the character or purpose of the business transacted. No municipal, political or governmental question is involved. The appellant and the appellee each owns and operates an electric plant and sells electricity for the purpose of profit to all persons who want tó buy it. What relation has the ownership 'of their respective. plants to the questions of unjust discrimination, extortionate charges and unequal or inferior service, which the Public Utilities act was intended to prevent ? The consumers of the appellant’s product may be the same persons as the consumers of the appellee’s product, or neighbors side by side. They may be required to pay extortionate rates or different rates for the same service, or .if they pay the same rate the service may be inferior. The appellant’s customer has a remedy. He may apply to the Public Utilities Commission for relief, and if the facts-justify it he is entitled to relief as a legal right. The appellee’s customer has no remedy. He can apply only to appellee, — the very authority of whose action complaint is made. In the one case the controversy .is submitted to a third party; in the other to one of the parties to the controversy. The appellee’s claim with reference to this classification is contained in the 'following extract from its brief: “The legislature has adopted its own classification of public utilities by authorizing the municipalities to regulate and control municipal public utilities and the State commission to regulate and control privately owned public utilities. This is a reasonable classification, based upon the different conditions arising under municipal and private ownership and operation. In the operation of a municipal public utility the public officials are conducting the business- for the people themselves, who are in a position to obtain such rates and regulation as may be reasonably required. On the other hand, privately owned utilities can only be controlled by an independent body, such as a State commission or other agency.” The persons who use the products or service of public utilities are entitled to the benefit of the Public Utilities act, and are entitled to its protection against extortion, discrimination and inferior service, by whomsoever furnished. The furnishing of such service is an ordinary commercial business by whomsoever undertaken. Whether a public utility is owned by a private corporation or a municipal corporation, its relation to its customers is not different. They are under the same compulsion to use its service, are at its mercy to the same extent. If a customer is oppressed by extortionate charges or discriminated against by a wrongful rate or inferior service, the wrong is the same whether done by a municipal corporation or a private corporation. The difference in ownership does not change the character of the wrong done or justify the refusal of a prompt, adequate and complete remedy in one case which is granted in the other. The fact that by organizing with others complaining customers may be able at some future election to secure a change of administration which will perhaps have the ability and sense of justice voluntarily to correct the wrong does not justify putting municipally owned public utilities in a class separate from other competing public utilities and relieving them from the supervision of the Public Utilities . Commission. The clause which excepts municipally owned or operated public utilities from the definition of a public utility in section 10 of the Public Utilities act is unconstitutional. Section 83' of the act provides that “if any section, subdivision, sentence or clause of this act is for any reason held invalid or to be unconstitutional, such decision shall • not affect the validity of the remaining portion of this act.” The act can be effectively carried out after eliminating the unconstitutional clause, and it is not necessary to declare the whole act unconstitutional. If some of the provisions of an act of the General Assembly are within the legislative power and others are beyond the legislative power, the former provisions may be held.valid while the latter must be held invalid. Section 83 is not a mere declaration of a common law rule but is a declaration of the legislative intention. It expresses the intention that the legislative purpose to establish a commission and give it authority for the regulation of public utilities shall not be defeated by the unconstitutionality of any section, subdivision, sentence or clause of the act. This general purpose of the act must be carried out though parts of it may be declared unconstitutional. The inclusion of municipal plants within the authority of the commission does not destroy the general legislative scheme, — it merely modifies it in detail. The General Assembly might have created the commission without exempting municipal corporations. Though it intended to exempt municipal corporations, it had the power to provide that if such exemption were invalid the act should still be valid without the exemption. This is the meaning of the declaration in section 83, and it is not the province of the court to say that the legislature did not mean what the words say or did not know what they meant. In our judgment the decree of the circuit court should be reversed.