1. An agreement of a public utility with a city to observe
specified rates remains binding even after the rates become
unremunerative if the contract does not lack mutuality. P.
268 U. S.
233.
2. The fact that the state legislature has power regulate the
rates does not deprive the contract between the utility and the
city of mutuality.
Id.
86 Fla. 583 affirmed.
Certiorari to a decree of the Supreme Court of the Florida
affirming a decree enjoining the petitioner from increasing its
rates for electric lighting.
MR. JUSTICE HOLMES delivered the opinion of the Court.
The City of Palatka brought this bill to restrain the
petitioner, the Southern Utilities Company, from charging more than
ten cents per kilowatt, meter measurement, for commercial electric
lighting in the city. It alleged a contract in the grant of the
petitioner's franchise
Page 268 U. S. 233
by which the petitioner was bound not to charge more than that
sum. The defendant pleaded that, in present circumstances, the rate
prescribed in the ordinance granting the franchise was unreasonably
low, and that to enforce it would deprive defendant of its property
without due process of law contrary to the Constitution of the
United States. The plea was overruled, and, defendant having
declined to plead further, a decree was entered for the plaintiff
by the Circuit Court for Putnam County which subsequently was
affirmed by the supreme court of the state. 86 Fla. 583.
The supreme court held that the city had power to grant the
franchise and to make the contract, and that it had no power of its
own motion to withdraw, but it concedes the unfettered power of the
legislature to regulate the rates. On that ground, the defendant
contends that there is a lack of mutuality, and therefore that it
is free, and cannot be held to rates that, in the absence of
contract, it would be unconstitutional to impose. The argument
cannot prevail. Without considering whether an agreement by the
company in consideration of the grant of the franchise might not
bind the company in some cases, even if it left the city free, it
is perfectly plain that the fact that the contract might be
overruled by a higher power does not destroy its binding effect
between the parties when it is left undisturbed.
Georgia
Railway & Power Co. v. Decatur, 262 U.
S. 432,
262 U. S. 438;
Opelika v. Opelika Sewer Co., 265 U.
S. 215,
265 U. S. 218.
Such a notion logically carried out would impart new and hitherto
unsuspected results to the power to amend the Constitution or to
exercise eminent domain. There is nothing in this decision
inconsistent with
Southern Iowa Electric Co. v. Chariton,
255 U. S. 539,
San Antonio v. San Antonio Public Service Co.,
255 U. S. 547, and
Ortega Co. v. Triay, 260 U. S. 103.
Decree affirmed.