Jochimsen v. City of Los Angeles

This action was brought to obtain an injunction restraining the city of Los Angeles, and the board of public service commissioners thereof, from increasing the rates charged for water furnished through and by means of its municipally owned water system, without the consent of the Railroad Commission of the state. The court having sustained a general demurrer to the complaint, judgment was entered in favor of the defendants. The plaintiff appeals from the judgment.

Only two questions are presented for decision. [1] Appellant first contends that by virtue of the constitution of the state of California, and the acts of the legislature, exclusive jurisdiction has been conferred upon the Railroad Commission to establish the rates to be charged in the sale of water as a publib utility; and that by consequence the city of Los Angeles, 'while engaged in the business of furnishing water to the public in said city, may charge only such rates as have been established by order of the Railroad Commission. The supreme court of California, in a decision covering this same question, has determined the matter adversely to the contentions of appellant here. For reasons fully set forth in that decision, we are satisfied that section 23 of article XII of the constitution of California was not intended to and does not vest in the Railroad Commission authority to regulate the rates to be charged by the city of Los Angeles in the sale of water to its inhabitants. (City of Pasadena v. Railroad Commission, 183 Cal. 526 [ 10 A. L. R. 1425 , 192 Pac. 25 ].)

[2] The second contention of appellant is that if it be held that municipally owned public utilities are not brought within the jurisdiction of the Railroad Commission by section 23' of article XII of the constitution, then that section should be held void as in violation of the fourteenth amendment to the constitution of the United States, because it denies to the plaintiff, or to any corporation or person who would be engaged in the operation of such public utility, the equal protection of the laws, in this, that it attempts to create an arbitrary discrimination and classification between

[3] The state may distinguish, select, and classify objects of legislation, and necessarily the power must have a wide range of discretion. “Classification for such purposes is not invalid because not depending upon scientific or marked differences in things or persons or in their relations. It suffices if it is practical, and is not reviewable unless palpably arbitrary.” (Orient Ins. Co. v. Daggs, 172 U. S. 557 , 562 [ 43 L. Ed. 552 , 554, 19 Sup. Ct. Rep. 281 , 282, see, also, Rose's U. S. Notes].) The classification under consideration in the case at bar is practical and is based upon a reasonable exercise and discretion of the legislative power. Without attempting to exhaust the list of possible illustrations, we will 'adopt that used by the supreme court of Illinois in Springfield Gas etc. Co. v. City of Springfield, 292 Ill. 236 [ 126 N. E. 739 ], We are informed that that case is now pending in the supreme court of the United States on writ of error. Nevertheless, we rely upon the state decision at this time because its reasoning appears to us to be correct upon the question now under consideration. [Note.—The Illinois decision was affirmed: U. S. Adv. Ops. 1921-22, p. 38.] The court said: “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

Shaw, J., and James, J., concurred.