San Diego Land & Town Co. v. National City

after stating the case as above, delivered the opinion of the court.

While admitting that the power to limit charges for water sold by a corporation like itself has been too often upheld to

Upon the point just stated we are referred to the decision of this court in Chicago, Milwaukee &c. Railway v. Minnesota, 134 U. S. 418 , 452, 456, 457. That case involved the constitutionality of a statute of Minnesota empowering a commission to fix the rates of charges by railroad companies for .the transportation of property. The Supreme Court of the State held that it was intended by .the statute to make the action of the commission final and^conclusive as to rates, and that the railroad companies were not at liberty, in any form or at any time, to question them as being illegal or unreasonable. This court said: “ This being the construction of the statute by which we are bound in considering the present case, we are of opinion that, so construed, it conflicts with the Constitution of the United States in the particulars complained of by the railroad com-, pa-ny. It deprives the company of its right to a judicial investigation, by due process of law, under the forms and with the machinery provided by the wisdom of successive ages for the investigation, judicially, of the truth of a matter in controversy, and substitutes therefor, as an absolute finality, the action of a railroad commission which, in view of the powers conceded to it by the state court, cannot be regarded as clothed with judicial functions or possessing the machinery of a court of justice.” “ By the second section of the statute in question it is provided that all charges made by a common carrier for the transportation of passengers or property shall be equal and reasonable. Under this provision the carrier has a right to make equal and reasonable charges for such transportation.

What this court said about the Minnesota statute can have no application to the present case unless it be made to appear that the constitution and' laws of California invest the municipal authorities of that State with power to fix water rates arbitrarily, without investigation, and without permitting the corporations or persons affected thereby to make any showing as to rates to be exacted or to be heard at any time or in any way upon the subject. The contention of appellant is that such is the purpose and necessary effect of .the constitution of-the State. We are not at liberty so to interpret that instrument. What the Supreme Court of California said in Spring Valley Water Works v. San Francisco, 82 California, 286, 306, 307, 309, 315, upon this subject would seem to be a sufficient answer to the views expressed by the appellant. In that case it was contended that a board of supervisors had fixed rates arbitrarily, without investigating, without any exercise of judgment or discretion, without any reference to what they should-

In the more.recent case of San, Diego Water Co. v. San Diego, 118 California, 556, 566, the. state court, referring to

"Was the appellant entitled to formal notice as to the precise day upon which the water rates would be fixed by ordinance ? We think not. The constitution itself was notice of the fact that ordinances or resolutions fixing rates would be passed annually in the month of February in each year and would take effect on the first day of July thereafter. It was made by statute the duty of the appellee at least thirty days prior to the 15th day of January in each year to obtain from the appellant a detailed statement, showing the names of water rate payers, the amount paid by each during the preceding year, and “all revenue derived from all sources,” and the “ expenditures made for supplying water during said time.” It was the right and duty of .appellant in January of each month to make a detailed statement, under oath, showing every fact necessary to a proper conclusion as to the rates that should be allowed by ordinance. Act of March 7, 1881, § 2, above cited. Provision was thus made for a hearing ,in an appropriate way.. The defendant’s board could not have refused to receive the statement referred to in the statute, or to ‘have duly considered it and given it proper weight in determining rates. If the State by its constitution

There is no ground to say that the appellant did not in fact have or was denied an opportunity to be heard upon the question of rates. On the contrary, it appears in evidence that the subject of rates was considered in conferences between the local authorities and the officers of the appellant. Those officers may not. have been present at the final meeting of the city board when the ordinance complained of was passed. They were not entitled, of right, to be present at that particular meeting. They were heard, and there is nothing to justify the conclusion that the case of the appellant was not fully considered before the ordinance was passed.

That it was competent for the State of California to declaró that the use of all water appropriated for sale, rental or distribution should be a public use and subject to public regulation and control, and that it could confer upon the proper municipal corporation power to fix the rates of compensation to be collected for the use of water supplied to any city, county or town or to the inhabitants thereof, is not disputed, and is not, as we think, to be. doubted. It is equally clear that this power could not be exercised arbitrarily and without reference to what was just and reasonable as. between the public and those who appropriated water and supplied it for

In view of these principles, can it be said that the rates in question are so unreasonable as to call for judicial interference in behalf of the appellant? Such a question is always an embarrassing one to a judicial tribunal, because it is primarily for the determination of the legislature or of some public agency designated by it. But when it is alleged that a state enactment invades or destroys rights secured by the Constitution of the United States a judicial question arises, and the courts, Federal and state, must meet the issue, taking care always not to entrench upon the authority belonging to a different department, nor to disregard a statute unless it be unmistakably repugnant to the fundamental law.

"What elements are involved in the general inquiry as to the reasonableness of rates established by law for the use of property by the public? This question received much consideration in Smyth v. Ames, above cited. That case, it. is

This court had previously held in Covington & Lexington Turnpike Road Company v. Sandford, 164 U. S. 578 , 597, 598 — which case involved the reasonableness of rates established by legislative enactment for a turnpike company — that a corporation performing public services was not entitled, as of right and without reference to the interests of the public, to realize a given per cent upon its capital stock; that stockholders were not the only persons whose rights or interests were to be considered; and that the rights of the public were not to be ignored. The court in that case further said; “ Each case múst depend upon its special facts; and when a court, without assuming itself to prescribe rates, is required to determine whether the rates prescribed by the legislature for a corporation controlling a public highway are, as an entirety, so unjust as to destroy the value of its property for all the purposes for which it was acquired, its duty is to take into consideration the interests both of the public and of the owner of the property, together with all other

These principles are recognized in recent decisions of the Supreme Court of California. San Diego Water Co. v. San Diego, (1897) 118 California, 556; Redlands' Domestic Water Co. v. Redlands, (1898) 53 Pac. Rep. 843 , 844.

The contention of the appellant in the present case is that in ascertaining what are just rates the court should take into consideration the cost of its plant; the cost per annum of operating the plant, including interest paid on money borrowed and reasonably necessary to be used in constructing the same; the annual depreciation of the plant from natural causes resulting from its use; and a fair profit to the company over and above such charges for its services in supplying the water to consumers, either by. way of interest on the money it has expended for the public use, or upon some other fair and equitable basis. Undoubtedly, all these mát ters ought to be taken into consideration, and such weight be given them, when rates are being fixed, as under all the circumstances will be just to the company and to the public. The basis of calculation suggested by the appellant is, however, defective in not requiring the real value of the property and the fair value in themselves of the services rendered to be taken into consideration. What the company is entitled to demand, in- order that it may have just compensation, is. a fair return upon the reasonable valúe of the property at the time it is being used for the public. The property may have cost more than it ought to have cost, and its outstanding bonds for money borrowed and which went into the plant may be in excess of the real value of the property. So that

One of the points in dispute involves the question whether the losses to the appellant arising from the distribution of water to consumers outside of the city are to be considered in fixing the rates for consumers within the city. In our judgment the Circuit Court properly held that the defendant city was not required to adjust rates for water furnished to it and to its inhabitants so as to compensate the plaintiff for any such losses. This is so clear that we deem it unnecessary to do more than to state the conclusion reached by us on this point.

One of the questions pressed upon our consideration is whether the ordinance of the city should have expressly allowed the appellant to charge for what is called a “ water right.” That right, as defined by appellant’s counsel, is one “to the continued and perpetual use of the water upon the land to which it has been once supplied upon payment of rates therefor established by the company.” - In the opinion of'the Circuit Court it is said thatno authority can anywhere be found for any charge for the so-called water right.” This view is controverted by appellant, and cases are cited which, it is contended, show thajfc the broad declaration of the Circuit Court cannot be sustained. Fresno Canal & Irrigation Co. v. Rowell, 80 California, 114; Same v. Dunbar, 80 California, 530; San Diego Flume Co. v. Chase, 87 California, 561; Clyne v. Benicia Water Co., 100 California, 310; San Diego Flume Co. v. Souther, 90 Fed. Rep. 164 .

We are of opinion that it is not necessary to the determination of the present case that this question should be decided. We are dealing here with an ordinance fixing rates or compensation to be collected within a given year for the use of water supplied to a city and its inhabitants or to any corporation, company or person doing business or using water within the limits of that city. In our judgment, the defendant correctly says in its answer that the laws of the State

The only issue properly to be determined by a. final decree in this cause is whether the ordinance in question, fixing rates for water supplied for use within the city, is to be stricken down as confiscatory by its necessaiy operation, and therefore in violation of the Constitution of the United States. If the ordinance, considered in itself, and as applicable to water used within the city, is not open to any such objection, that disposes of the case, so far as any rights of the appellant may be affected by the action of the defendant. The appellant asks, among other things, that it be decreed to be entitled to charge and collect for “ water rights ” at reasonable rates as a condition upoh which it will furnish water for the purposes of irrigation, notwithstanding the rates fixed by the defendant’s board of trustees for water sold and furnished within the city. That is a question wholly apart from the inquiry as to the' validity under the Constitution of the United States of the ordinance of the defendant fixing annual rates in performance of the duty enjoined upon it by the constitution and laws of the State. Counsel for appellant, while insisting that the Circuit Court erred in saying that there was no such thing as a “ water right,” says: “ The constitution of the State has nothing whatever to do with a water right or the price that shall be paid for it. It simply provides for fixing the annual rental to be paid for the water furnished and used. When one obtains his water right by purchase or otherwise, he has a right to demand that the water shall be furnished to his lands at the price fixed, as provided by law, and that the company shall exact no more. But he must first acquire the right to have the water on such tertns. Whether in fixing the annual rates to be charged, the' body authorized to fix them' can take into account the amount that has been received by the company for water rights, is another question, and one that is not presented in this case. Nor is any question raised

These reasons are sufficient to sustain the conclusion already announced, namely, that the present case does not require or admit of a decree declaring that the appellant may, in addition to the rates established by the ordinance, charge for what is called a “‘water right” as defined by it. It will be time enough' to decide .such a point when a case actually arises between the appellant and some person or corporation involving the question whether the former may require, as a condition of its furnishing water within the limits of the city on the terms prescribed by the defendant’s ordinance, that it be also paid for what is called a “ water right.”

"W"e will not extend this opinion by an analysis of all the evidence. It is sufficient to say that upon a careful scrutiny.of the testimony our conclusion is that no case is made that will authorize a decree declaring that the rates fixed by the defendant’s ordinance, looking at them in their entirety — and we cannot properly look at them in any other light — are such as amount to a taking of property without just compensation, and therefore to a deprivation of property without due process of law. There is evidence both ways. But we. do not think that we are 'warranted in holding that the rules upon which the defendant’s board proceeded were in disregard of the principles heretofore announced by this court in the cases cited. The case is .not one for judicial interference with the action of the local authorities to whom the question of rates was committed by the State.

The decree dismissing the bill is

Affirmed.