St. Cloud Pub. Svc. Co. v. City of St. Cloud - 265 U.S. 352 (1924)
U.S. Supreme Court
St. Cloud Pub. Svc. Co. v. City of St. Cloud, 265 U.S. 352 (1924)
St. Cloud Public Service Company v. City of St. Cloud
Argued October 2, 1923
Decided May 26, 1924
265 U.S. 352
1. A state may authorize a municipal corporation to establish by contract the rates to be charged by a public service corporation for a definite term, not grossly unreasonable in time, and the effect of such a contract is to suspend, during its life, the governmental power of regulating the rates. P. 265 U. S. 355.
2. Where a public service corporation and a municipality, having power to contract as to rates, exert it by fixing them for a particular time, the rates are enforceable under the obligation of the contract, even though they become "confiscatory." Id.
3. In Minnesota, a city charter, by authorizing the common council to provide for and control the erection and operation of gas works for supplying the city and its inhabitants with heat and light, and to grant the right to erect, maintain, and operate such works with all rights incident or pertaining thereto to one or more private corporations, empowered the city to enter by ordinance into a contract, in its proprietary capacity, with a private corporation, providing for the construction and operation of gas works for the period of thirty years, and fixing the rates for gas sold the city and its inhabitants. P. 265 U. S. 359.
4. Where a municipality having both the power to contract a to rates and the power to prescribe rates from time to time, exercises the former, the power to regulate is suspended during the contract, and the contract is binding. P. 265 U. S. 360.
5. The provisions of the Minnesota Constitution, Art. IV, § 33, prohibiting the legislature from enacting any special or private laws for granting corporate powers or privileges, except to cities, or for granting to any individual, association, or corporation, except municipal, any special or exclusive privilege, immunity, or franchise whatever, do not apply to contracts made by municipalities under charter powers granted them by the legislature. Id.
6. An ordinance under which a gas company, in consideration of rights and privileges granted, covenanted, and agreed to erect and operate a plant and sell gas, etc., and which contained a clause by which the grantee was "authorized" to sell at not to exceed a price fixed -- construed as a contract fixing that as the maximum rate. P. 265 U. S. 361.
7. A law authorizing cities to regulate rates of public service corporations cannot be invoked by a company to increase the rates fixed by its contract with a city before the law was enacted. P. 265 U. S. 364.
Appeal from a decree of the district court dismissing for want of equity a bill brought by a gas company to enjoin interference with a proposed increase in its rates.