Court Opinion

ID: 8823340
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:39:57.277283+00
Date Added: 2024-06-11T17:04:42.214138
License: Public Domain

STONE, Circuit Judge
(dissenting). I am compelled to dissent by the following considerations, which seem, to me, controlling: Union Dry Goods Co. v. Georgia P. S. Corp., 248 U. S. 372, 39 Sup. Ct. 117, 63 L. Ed. 309, 9 A. L. R. 1420, is the latest of a long line of cases in the Supreme Court declaring the law that contracts with public service corporations affecting rates to be charged for such service are made subject to the police power of the state to change such rates on the grounds of inadequacy or of discrimination. That rule has been enforced by this court. Public Utilities Commission v. Wichita R. & E. Co. (C. C. A.) 268 Fed. 37. The Omaha Water Company was clearly such a public service corporation. It could not bind itself to any private consumer by contract so as to affect the right of the state to control the rates charged. The contract between the packing company and the water company, here involved, was, under the above line of cases, made subject to state control as to the service charge or rate. The character of the contract, in this respect, could not be affected by its assumption by a purchaser of the business and plant of the water company.
The effect of such purchase was merely to substitute a stranger for one of the contracting parties. It did not alter the obligations of the contract in any other manner. Obviously, an assignment of the contract cannot increase the power of the parties to contract away the declared controlling police power of the state. The city, as furnisher of water to private consumers, could not contract with a consumer for a rate which could not be changed by the state, if such rate proved noncompensatory or discriminatory. What the city could not do directly it could not do indirectly by assuming such a contract already made. The whole situation is comprehended in the statement that the police power of the state to control, within certain limits, charges for public utility services, cannot be abridged or affected by the private contract or conduct of any one.
The mere incidental fact that the unexpired term of the contract was short (two years) cannot affect, much less control, the legal situation. In passing, it may b.e said that the unexpired term involved in the Union Dry Goods Company Case, supra, was but three years.
Here, it has been demonstrated that the contract rate involved is non-compensatory. Hence the condition authorizing exercise of the state police power as to these rates has arisen, and it has been acted upon by the proper state authority.