Court Opinion

ID: 6979451
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:16:56.419583+00
Date Added: 2024-06-11T16:09:07.926348
License: Public Domain

Mr. Justice Duncan delivered the opinion of the court: Appellee, the city of Springfield, owns and operates an electric light plant, produces electricity for its own use and. sells electricity not required for its purposes to private consumers at about one-half the cost for which it can be procured from other sources. Appellant is a private corporation engaged in the production and sale of electricity in ■the city of Springfield and has complied with the provisions of the Public Utilities act. It filed its bill for an injunction against appellee in the circuit court of Sangamon county, alleging, in substance, that appellee in its production and sale of electricity to private consumers is violating section 35 of-the Public Utilities act, providing that no public utility shall undertake to perform any service or to furnish any product or commodity unless and 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 that act; also that appellee is violating sections 33 and 34 of said act, which require the filing with the Public Utilities Commission and the printing, posting and keeping open to public inspection of schedules showing all rates, charges and classifications in force for any product furnished or service rendered by it as such public utility. The city filed an answer, to which appellant filed exceptions. There was a hearing on the bill, answer and exceptions, and the court entered a decree dismissing the bill for want of equity. The theory of the bill is that appellant and appellee are competitors in business, are operating public utilities and are both subject to the Public Utilities act; that appellee not having complied with the requirements of the act is prohibited by its terms from engaging in the business, and that appellant is entitled to an injunction to prevent the illegal competition. The parties have treated the issues in the case as questions of law, precisely as if they had arisen on a demurrer to the bill. In disposing of this appeal the court will also indulge in that same assumption. ■ The question for decision in the case is whether or not a municipality in this State owning and operating an electric light plant for the production of electricity for its own use and also for the sale thereof to private consumers is* subject to the provisions of the act and to the supervision of the Public Utilities Commission. We are disposed to agree with the proposition of appellant that a private corporation lawfully operating a public utility may have an injunction against another private corporation operating without authority of law a similar utility which competes with and injures the former’s business. Municipal corporations, however, are expressly excepted from the terms and provisions of the Public Utilities act by section io thereof and in a very emphatic manner, — so much so that there can be no question that the act was not intended to apply to any public utility owned by a city. The following definitions are found in said section io: “The term ‘public utility,’ when used in this act, means and includes every corporation, company, association, joint stock company or association, firm, partnership or individual, their lessees, trustees, or receivers appointed by any court whatsoever, (except, however, such public utilities as are or may hereafter be owned or operated by any municipality) that now or hereafter: (a) May own, control, operate or manage, within the State, directly or indirectly for public use, any plant, equipment or property used or to be used for or in connection with the transportation of persons or property or the transmission of telegraph or telephone messages between points within this State; or for the production, storage, transmission, sale, delivery or furnishing of heat, cold, light, power, electricity' or water. “The term ‘company,’ when used in this act in connection with a public utility, includes any corporation, company, association, joint stock company or association, firm, partnership or individual, their lessees, trustees, or receivers appointed by any court whatsoever, owning, holding, operating, controlling or managing such a public utility, but not municipal corporations. “The term ‘corporation,’ when used in this act, includes any corporation, company, association, joint stock company or association, but not municipal corporations.” The Public Utilities act was passed June 20, 1913, as House Bill No. 907, and was approved June 30, 1913. It did not take effect until January 1, 1914, by special provision, because of the fact that that time was considered necessary for the appointment of the Public Utilities Commission created thereby and for the Railroad and Warehouse Commission to prepare its books and records to be taken over by the Public Utilities Commission. The Municipal Ownership act was passed June 20, 1913, as Senate Bill No. 538, was approved June 26, 1913, and became effective July.1, 1913. By section 1 of the latter act any city of this State is given 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 utility, to fix rates and charges for the service rendered by such public utilities and to make all needful rules and regulations in relation thereto. The term “utility,” when used in the act, is defined thereby to mean and include any plant, equipment or property and any franchise, license or permit used or to be used for the production, storage, transmission, sale, delivery or furnishing of cold, heat, light, power, or for the conveyance of oil or gas by pipe line, etc. Section 12 of the act provides that the charges for the service rendered by means of any public utility of any city shall be high enough to produce a revenue sufficient to bear all costs of maintenance and operation, to meet interest charges on bonds and certificates issued on account thereof, and to permit the accumulation of a surplus- or sinking fund that shall be sufficient to meet all outstanding Bonds or certificates at maturity. Section 13 thereof provides that the accounts for the public utility shall be kept distinct from other city accounts and in such manner as to show the true and complete financial results of such city ownership and operation, and so as to show the actual cost to such city of the public utility owned, all cost of maintenance, extension and improvement, all operating expenses of every description and the amounts set aside for sinking fund purposes, and also reasonable allowances for interest, depreciation and insurance, and estimates of the amount of taxes that would be chargeable against such property if owned by a private corporation. It further provides that the city council shall cause to be printed annually for public distribution a report showing the financial results of such city ownership and operation, in form as aforesaid, and that the accounts of such utility, so kept, shall be examined once each year by an expert accountant, who shall report to the city council the result of his examination. As will be seen from the foregoing, the Municipal Ownership act is a complete act within itself, authorizing cities to acquire, own and operate public utilities within their borders and to regulate the same and fix rates and charges as aforesaid, and the act furnishes the reason for excepting such public utilities from the jurisdiction of the Public Utilities Commission by the provisions of section io of the Public Utilities act. Appellant insists that if such public utilities owned and operated by cities should be held to be excepted from the jurisdiction of the Public Utilities Commission, as provided in said section io, such a construction would render that exception void because in violation of section 22 of article 4 of the State constitution, prohibiting the legislature from passing any local or special'law granting to any corporation, association or individual any special privileges, and also, in violation of the fourteenth amendment to the Federal constitution, which prohibits the States from denying to any person the equal protection of the laws. In the determination of the validity or invalidity of particular provisions of public laws, courts should not be unmindful of the effect upon the entire enactment of the holding of any particular provision invalid. If the exception in section 10 is of such import that the other sections of the Public Utilities act without such exception would cause results not contemplated or desired by the legislature, then the entire statute must be held invalid if we hold the exception invalid. (Connolly v. Union Sewer Pipe Co. 184 U. S. 540.) On the other hand, if section io is held to be invalid and the balance of the act valid, then a large portion of the Municipal Ownership act must likewise be held to be invalid, as a bare inspection of the act will show. The purpose of the Public Utilities act expressed in its title is to provide for the regulation of public utilities. If municipal corporations are made subject to the act, will a result be produced contrary to the intention of the legislature? The legislature by the exception in section io has answered this question and- has left nothing to inference, unless, as contended by appellant, section 83 of said act has expressed a different and controlling intention by this language: “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 statute must be considered as a whole and the intention derived from a consideration of all of its clauses and provisions. The statute, we must infer, was adopted in accordance with a plan. (State v. Gants, 124 La. 535.) That plan was, that all private corporation's owning and operating, public utilities should be bound by all the provisions of the act and that all municipal corporations should be excluded from the provisions of the act. Public utilities owned and operated by municipalities were to be governed and controlled by the provisions of the Municipal Ownership act and regulated only by such municipalities. It is not possible to get away from these conclusions. To strike out the provisions of section 10 exempting municipalities from the terms and provisions of the Public Utilities act and to then hold that' the remainder of the act is valid would be the making of a law by this court that the legislature never intended to make and at the same time would Lbe nullifying a large portion of the Municipal Ownership act which the legislature clearly intended should be and remain effective. While it is well settled by adjudications of this and other courts that if different sections of a statute are independent of each other, that which is unconstitutional may be disregarded and valid sections allowed to stand and be in force, yet it is also the inflexible rule thát where a portion of an act is valid and a portion invalid, and the court cannot say that the legislature would have passed the act with the void portion eliminated, then the entire act must be held invalid. People v. McBride, 234 Ill. 146; Cornell v. People, 107 id. 372; Hinze v. People, 92 id. 406; People v. Cooper, 83 id. 585; Mathews v. People, 202 id. 389; Kellville Coal Co. v. Harrier, 207 id. 624. We cannot agree with appellant’s contention that the saving clause in section 83 of the Public Utilities act will justify this court in holding invalid the exception in section 10 without affecting the act as a whole. Section 83 was not intended to nullify any rule of statutory construction and must receive a construction consistent with the rules of constitutional law. While this section may be some indication of legislative intention, yet in construing it we must give due consideration to the rules heretofore laid down by this court in the interpretation‘of statutes. (State v. Bancroft, 148 Wis. 124.) We cannot, under such rules, ignore the fact that the enforcement of this section to the letter would not only nullify the exceptions in section 10 aforesaid, but would practically nullify the whole Municipal Ownership act. The history of the legislation under consideration furnishes the court material aid in determining whether or not the legislature would have passed the act with the exception in section 10 eliminated. It appears from the senate and house journals as quoted by appellant that the two.acts were introduced and passed as twin measures. They were passed after a legislative inquiry made by a committee appointed under a joint resolution passed in 1911, authorizing an inquiry into public utilities and also municipally owned public utilities. A spirited contest appears to have been waged concerning the Public Utilities act in reference to the senate’s “home rule” amendments, giving to cities the right to regulate public utilities. The house refused to concur in those amendments, and later the senate receded from its amendments and permitted the house bill to become a law and the house permitted the senate bill to become a law. The Governor submitted the house bill to the Attorney General for his opinion as to its form and constitutionality. In that opinion the Attorney General said: “The' bill as originally framed provides for the exercise by each city of power and authority to regulate its own public utilities, but the provisions on that subject were stricken out before the bill was finally adopted. However, the General Assembly has passed Senate Bill No. 538, which, as I have already informed you, is constitutional and valid and which by its terms authorizes cities to own and operate public utilities within their limits, arid section 10 of House Bill No. 907 especially exempts municipally owned or operated public utilities from the operation of the act.” (Reports and Opinions of Attorney General, 1913, p. 46.) The efforts of the Governor, who signed these measures, to get the home rule feature incorporated in the house bill are well known by everybody who is familiar with the contest over these measures during the time they were pending in the legislature. It seems to us that the conclusion must follow that if the exception contained in section 10 had been stricken by amendment the Public Utilities act would never have been passed by that legislature, as the act would then have authorized the Public Utilities Commission to regulate and fix rates for public utilities owned and operated by municipalities, contrary to the provisions of the Municipal Ownership act. This court would, in our judgment, be virtually making a law by so amending the act and holding the Public Utilities act valid as amended. Courts have no power to make laws. If appellant’s contention is correct that the exception in section io creates a special or local law and grants special privileges in violation of our constitution, this court would have no alternative but to hold it invalid, even though in doing so we would be compelled to declare the entire Public Utilities act unconstitutional. But we do not agree with appellant’s contention that exempting municipalities and public utilities owned and operated by municipalities from the provisions of the statute violates the constitution. The word “corporation,” as used in section 22 of article 4 of our constitution, does include municipal corporations. (People v. Fox, 247 Ill. 402.) But municipal corporations may form a separate and distinct class from private corporations. 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 if there is a valid reason for such particular operation. (Condon v. City of Chicago, 249 Ill. 596; Tarantina v. Louisville and Nashville Railroad Co. 254 id. 624; Dawson Soap Co. v. City of Chicago, 234 id. 314; Douglas v. People, 225 id. 536; Casparis Stone Co. v. Industrial Board, 278 id. 77.) Of course, 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 the particular persons to whom it applies from all other persons, having some reasonable and just relation to the purpose of the law. (People v. Kewanee Light Co. 262 Ill. 255.) The basis of the two statutes in question for making two distinct classes of public utilities, — those owned and operated by private corporations and those owned and operated by municipalities,— is the supposition that there exists some valid reason why both of them cannot or should not be subject to all the provisions of the Public Utilities act and be regulated and rates fixed for them in accordance with the provisions of that act. If such a valid reason does exist, the legislature did not violate any constitutional provision in enacting the two separate acts for the regulation and control of the two classes of public utilities. The legislature may classify persons or occupations for the purpose of legislative regulation and control, provided such classification is not an arbitrary one and is based upon some substantial difference which bears a proper relation to the classification. People v. Schenck, 257 Ill. 384. The purposes of the Public Utilities act were to prevent exorbitant rates, unjust discrimination and undue preferences in rates between different consumers and at the same time to protect public utilities from local influences which would compel them to render services at such low rates that efficient services to the public would be thereby impaired. To enable consumers to protect themselves against exorbitant rates and unjust discrimination without compelling them, in the first instance, to resort to their right to a hearing under the act on the question of rates, sections 33, 34 and 35 were incorporated in the Public Utilities act, requiring the filing of schedules of rates and the posting and publishing of the same. No such requirement is necessary for the protection of the consumer when the utility is owned and operated by the municipality. Before the enactment of the Public Utilities act the records of public utilities owned by private corporations or private persons were free from public inspection. Municipalities speak only by their records, which are always open to inspection. Under section 1 of the Municipal Ownership act, granting municipalities the power to own and operate public utilities and fix the rates and charges for the services rendered by them and to make all needful rules and regulations in relation thereto, municipalities can only act by ordinances and resolutions passed in the manner required by statute. Municipalities under the Municipal Ownership act are limited in rates and charges for the product furnished by their public utilities, and cannot operate them at a profit to the same extent as can private corporations, associations or persons owning like utilities. They are required, under the act governing them, to keep separate accounts of the moneys received from the operation of their utilities, and such funds cannot be used as revenues except to discharge their obligations and expenses in the operation of the utilities. Their charges for.such services are simply to be high enough to produce revenue sufficient to bear all costs of maintenance and operation, to meet interest charges on bonds and certificates issued on account thereof, and to permit the accumulation of a surplus or sinking fund sufficient to meet all outstanding bonds or certificates at maturity, issued on account of such utilities. The statute does not contemplate that the rates shall be higher or lower than for the purposes aforesaid, no matter what effect such rates and charges may have upon other corporations or persons owning or operating public utilities. The legislature had the right and power to authorize and empower municipalities to own and operate public utilities. That is not questioned in this case. It is 'not questioned that the legislature had the power to prescribe, the rates and charges or the limits of the same to municipalities, as it has done in the Municipal Ownership act. The right to fix rates for all public utilities is vested, in the first instance, in the State. The State has the right to prescribe rates and charges by private corporations and persons for the operation of public utilities that shall produce a reasonable profit or return over and above and on their entire investment and outlay, and, on the other hand, to limit the rates and charges of utilities owned by municipalities so that they will only be sufficient to meet outlays and expenses of every kind by reason of their ownership and operation, as provided by the Municipal Ownership act. It is contemplated that private corporations' and persons shall realize profits. The legislature had the right to assume that the rates and charges of each of these two classes of public utilities would not and could not be the same to consumers. It is clear, therefore, that the legislature acted within its constitutional rights and powers in enacting the two statutes and making different provisions in so far as the same were necessary to accomplish the purposes for which the two acts were enacted: It is equally clear that the legislature had the right and power to delegate to the municipalities the right of regulation and control of such municipally owned plants. Such right is clearly recognized not only in this State, but in other States. It might have given the Public Utilities Commission the right to fix the rates and charges of plants owned by municipalities in accordance with the provisions of the Municipal Ownership act, as well as the right to regulate and fix charges for privately owned public utilities under the Public Utilities act, had it seen fit to do so. The fact that it has designated municipalities as the proper bodies that shall regulate and fix the rates to be charged by utilities owned by them can furnish ho causé for complaint to appellant, as the rates that appellant may charge under the Public Utilities act aré necessarily fixed upon a different basis, and may or may not be the same as the rates and charges that may be fixed under the Municipal Ownership act, even in the same city.. There is another reason for holding that neither of the two acts aforesaid violates section 22 of article 4 of our constitution or the fourteenth amendment to the Federal constitution. A law is not local or special, in a constitutional sense, if it operates in the same manner upon all persons in like circumstances. “A law general in its character may extend only to particular classes and not be obnoxious to the provisions of the constitution if all persons of the same class are treated alike under similar circumstances and conditions. A law is general, not because it embraces all the governed, but that it may from its terms, when many are embraced in its provisions, embrace all others when they occupy like positions to those who are embraced. Such a law must be based upon some substantial difference between the situation of a class or classes and another class or classes to which it does not apply.” (Chicago, Burlington and Quincy Railroad Co. v. Doyle, 258 Ill. 624.) When tested by the foregoing rules it will readily appear that the Public Utilities act does not violate-the constitutional provision aforesaid by reason of the exception in section 10. The Municipal Ownership act for the same reason is equally unobjectionable, so far as it is material to the issues in this case. There is no reason for appellant’s contention that any part of the Municipal Ownership act is repealed by implication by the provisions of the Public Utilities act, because the latter act was passed after the enactment of the former. Whether or not public utilities owned by municipalities shall be placed upon a different basis from public utilities owned by private corporations, associations or persons for regulation and for fixing their rates and charges is a question solely for the legislature to determine, as is also the question whether or not they shall be regulated and rates fixed for them by different tribunals or by the same tribunal. There was a good and substantial reason for the legislature dividing public utilities into the two classes aforesaid and making laws specially applicable to each of them, as aforesaid. ' When we consider the acts in this light their several provisions are in complete harmony, and are not so antagonistic to each other in the matters complained of by appellant as to leave any reasonable ground for the contention that any provision of the Municipal Ownership act is repealed by implication by any provision of the other act. We have no disagreement with the general proposition argued by appellant that a municipal corporation which supplies its inhabitants with light, gas or water does so in its capacity of a private corporation and not in the exercise of its powers of local sovereignty. This general principle has been announced in a number of cases in this and other jurisdictions, mostly in cases for personal injuries arising on the question of the liability of cities operating municipally owned public utilities. We may concede that the operation by a municipality of an electric light plant for the furnishing of light or power to private consumers for gain cannot in any sense be the performance of a governmental function. Such established principle can furnish no reasonable basis for appellant’s argument in this case that such municipalities must be put in the same class with private corporations or persons operating public utilities, for the purpose of regulation and of fixing their rates and charges in operating such public utilities. It might just as well be argued that corporations operating steam railroads should be put in the same class, for all purposes of legislation, with corporations operating street railroads, because they both carry for hire passengers and freights of all kinds. Chicago, Indianapolis and Louisville Railway Co. v. Railroad Com. 173 Ind. 469. Appellant suggests that if we construe the exception in section 10 of the Public Utilities act as simply excepting municipal plants that only produce electricity for the use and requirements of the municipalities when acting in their governmental capacity, such a construction would render the whole act valid. It is argued that such a construction is permissible under the well known rule that words in a statute may be modified, altered or supplied so as to obviate any repugnance or inconsistency with legislative intention, although in so doing particular provisions of an act may not be read or construed according to their literal reading. (Public Utilities Com. v. Monarch Refrigerating Co. 267 Ill. 528.) It is therefore urged that the exception should be read as if it were written, “except, however, such public utilities as are or may hereafter be owned or operated by any municipality for its owi% use.” This contention is fully answered already, we think, by our showing that there is no such repugnance or inconsistency in these statutes to be obviated, and there is therefore no necessity for invoking the rule suggested. Besides, it is clear that no such rule could be applied, in any event, without doing violence to the legislative intent. There can be no doubt whatever that the legislature intended that public utilities owned and operated by municipalities should not be under the supervision and regulation of the Public Utilities Commission in any way. There is also no- reason for supposing that such municipally owned and operated plants as only produced electricity or other product for the use of the municipalities were intended to be excepted by section io. Such a utility would not be a public utility any more than would a utility owned and operated by a private individual for his own use exclusively. The term “public utility” implies a public use carrying with it the duty to serve the public and treat all persons alike, and it precludes the idea of- service which is private in its nature and is not to be obtained by the public. (Public Utilities Com. v. Bethany Telephone Ass’n, 270 Ill. 183.) No such private utility could be considered as being subject to the provision of said act in the absence of any exception, and the legislature cannot be reasonably held to have made such a meaningless- exception in this statute. One of the statements made'.by appellant, and upon which it bases an argument that section 10 aforesaid, with its exceptions aforesaid, is unconstitutional, is, that “any legislation which pretends to relieve the city of the same burdens of regulation imposed upon private corporations or individuals engaged in like enterprise is invalid.” As we have already shown, municipally owned public utilities are not exempt from regulation by the Municipal Ownership act as to rates and charges, and they are not exempt from the making of rates and charges that are reasonable and just and uniform for the same amount and character of service. Under the Municipal Ownership act the consumers are just as completely protected from exorbitant rates and unjust discrimination as the consumers are under the Public Utilities act. If the consumers had to- depend entirely upon the municipalities to be kept free from the effects of unjust and exorbitant rates and unjust discrimination then there might be some reason for appellant’s contention. The consumers of the product of utilities of private corporations and private persons operating under the Public Utilities act may be just as much subject to be burdened with exorbitant and unjust rates and unjust discrimination under the action of the Public Utilities Commission, if we are to assume that all public officials would be corrupt and unfair or inefficient .when acting in such capacity. The Public Utilities Commissidn may make serious mistakes in rating and in regulating public utilities, and so may officers of municipalities acting in a similar capacity. We have no reason to assume that either one will intentionally be corrupt or unfair.. There is little or no reason why either body might be more unfair or corrupt than the other. But the consumers in either case have the right to appeal to the courts to correct such abuses as may occur. Municipal officers under the Municipal Ownership act cannot discriminate in rates or make exorbitant and unjust rates to consumers if they discharge their duties faithfully, honestly and efficiently under that act. All their rates and charges fixed by ordinances or resolutions are subject to review by the courts to a like extent as the rates fixed by the Public Utilities Commission for public utilities privately owned, although the matter of review may be had under a different law and by a different remedy. Butler v. Karb, 96 Ohio St. 472; City of Cincinnati v. Public Utilities Com. 98 id. 320; 2 Abbott on Mun. Corp. 1196. The question whether or not the appellant or any other public utility or person may be injured or the Public Utilities act violated-by a lessee of appellee is not in this case, as appellee has not leased and is not intending to lease its plant to" any private corporation or person whatever, and' appellant does not claim that there is to be such a leasing. Upon the same footing is the question whether or not appellee may sell its product to persons residing outside its corporate limits. We must therefore regard all such discussions by appellant as serving no useful purpose in this case and as not proper to be further considered by us in this opinion. Municipal ownership of public utilities may or may not be a wise policy for the State. It was a matter for the legislature and not for this court to determine. The act has been adopted, as aforesaid, and we find no legal reason why it should not be held valid as written, in so far as it is questioned in this case. Appellant’s contention, therefore, that public utilities owned and operated by municipalities are subject to the same regulation and rates under the Public Utilities act as those owned and operated by private corporations, and that it should be granted an injunction on the grounds contended for by it, cannot be sustained. The decree of the circuit court is affirmed. Decree affirmed.