1. As construed by the state supreme court, which construction
binds this Court upon appeal, rates established pursuant to the
provisions of the public service commission law of Missouri (R.S.,
1929, c. 33) supersede all existing contract rates. P.
300 U. S.
113.
2. A State has power to annul and supersede rates previously
established by contract between public utilities and their
customers. P.
300 U. S.
113.
3. The public service commission law of Missouri does not
violate the contract clause of the Federal Constitution (Art. I, §
10) or the due process clause of the Fourteenth Amendment,
although, as construed by the state supreme court, existing
contract rates are abrogated thereunder by (1) the mere filing,
pursuant to the statute, of a rate schedule by the utility; or (2)
the filing of a schedule pursuant to a rate order promulgated by
the commission, it appearing that, under the statute, the party now
insisting on its contract rates had opportunity, of which it did
not avail itself, to support the contract rates and to test before
the commission and in the state supreme court the validity of the
filed schedules. Pp.
300 U. S.
112-114.
4. It is not essential that there be specific adjudication in
respect of existing contract rates in order that these may be
susperseded by
Page 300 U. S. 110
the State in the exercise of its power to prescribe and enforce
reasonable and nondiscriminatory rates. P.
300 U. S.
114.
5. The fact that the Missouri law, as construed by the state
supreme court, permits a utility to recover the difference between
rate fixed by contract and the higher rates established pursuant to
the statute, even though the service had been furnished and paid
for in accordance with the contract before the suit was brought,
the customer having refused to pay the lawful rate,
held
not to render the statute violative of the aforementioned clauses
of the Constitution. P.
300 U. S.
114.
338 Mo. 1141; 93 S.W.2d 954, affirmed.
Appeal from a judgment in favor of the Power & Light Company
in its suit to recover the difference between rates fixed in a
contract with the Realty Company and higher rates established under
the state public service commission law. From a judgment of the
trial court which allowed recovery in part, both parties had
appealed to the state supreme court.
MR. JUSTICE BUTLER delivered the opinion of the Court.
The questions for decision are whether, as construed in this
case by the highest court of Missouri, the statutes of that State
regulating public utilities violate Article 1, § 10 of the
Constitution of the United States, declaring that "No State shall .
. . pass any . . .Law impairing the Obligation of Contracts," or §
1 of the Fourteenth Amendment declaring "nor shall any State
deprive any person of life, liberty, or property, without due
process of law."
Appellee was plaintiff, and appellant defendant below. They made
a contract whereby the former, for specified rates, agreed to
furnish the latter steam for heating its buildings in Kansas City
for a term of five years ending
Page 300 U. S. 111
August 31, 1913, with option to defendant to extend the contract
for an additional five years. March 17, 1913, the state public
service commission law was enacted. [
Footnote 1] May 29 following, defendant exercised its
option, and so extended the term of the contract to August 31,
1918.
June 28, 1917, plaintiff in pursuance of the statute, [
Footnote 2] filed with the commission a
schedule of steam heating rates to become effective August 1, 1917;
they were higher than those specified in the contract. The city and
numerous users other than defendant objected; the commission,
without attempting to apportion operating expenses and values
between plaintiff's heating and electric service, found that the
rates filed were unreasonably high and prescribed, as just and
reasonable, rates lower than those filed but higher than the
contract rates and made them effective March 1, 1918. 5 Mo.P.S.C.
664. Plaintiff filed a new schedule in accordance with the
commission's order.
June 11, 1918, it complained that these rates were confiscatory.
The commission, after apportioning operating expenses and values
between the electrical and steam services, found the rates
"inadequate, unjust and unreasonably low," that, during none of the
time was "heating revenue sufficient to even meet the fuel expense
alone," and that "heretofore the steam heating business has been
carried at a loss, and this loss has been borne either by the light
and power consumers or by the company." Thereupon, it ordered new
and higher rates effective December 1, 1919. 8 Mo.P.S.C. 223, 292,
296. The findings and order of the commission were approved by the
supreme court in
State ex rel. case v. Public Serv.
Comm'n, 298 Mo. 303, 249 S.W. 955.
For steam furnished defendant after August 1, 1917, plaintiff
regularly sent bills based on the rates it had
Page 300 U. S. 112
filed with the commission. Claiming the contract rates still to
be applicable, defendant paid amounts calculated in accordance with
them. Plaintiff gave defendant credit for the payments it made.
After expiration of the period covered by the contract as extended,
plaintiff brought this suit. For steam furnished after August 1,
1917 and before March 1, 1918, it sought to recover on the basis of
the charges specified in the first schedule filed. For steam
furnished after March 1, 1918 to the end of the contract term, it
sought to recover on the basis of charges of the schedule
promulgated by the commission. The trial court held plaintiff not
entitled to recover on its claim in respect of the first period,
but gave judgment in its favor in respect of the other one. Both
parties appealed. The Missouri supreme court ruled the contract
rates not applicable, held plaintiff entitled to recover on its
claim in respect of both periods, and directed that it have
judgment for the sums calculated on the basis of the schedules
filed with the commission.
Defendant's contention is not that the State lacked power by
appropriate action to establish and enforce just and reasonable
rates, but that, as against the constitutional provisions invoked,
the action taken under the public service commission law was not
sufficient to abrogate the contract rates.
Specifically, its complaints are that the court construed the
statute (1) to make (a) mere filing of plaintiff's schedule and (b)
the later promulgation of a schedule by the commission effective to
abrogate the contract rates, and (2) to require that, although the
contract was in due time fully performed and defendant prior to the
commencement of the suit had paid plaintiff the contract rates, it
was bound to pay additional amounts calculated on the basis of the
higher rates specified in plaintiff's published schedules. It is
upon these grounds that defendant
Page 300 U. S. 113
contends that the state law violates the quoted clauses of the
Constitution.
These questions are to be decided upon the construction that the
state supreme court put upon the statute. And that law is to be
taken as if it declared that rates made in accordance with its
provisions shall supersede all existing contract rates. [
Footnote 3] There is here involved no
question as to the validity of the rates prior to the passage of
the statute. Without expression of opinion, we assume that then
parties were bound by the contract. But the State has power to
annul and supersede rates previously established by contract
between utilities and their customers. [
Footnote 4] It has power to require service at
nondiscriminatory rates, to prohibit service at rates too low to
yield the cost rightly attributable to it, [
Footnote 5] and to require utilities to publish their
rates and to adhere to them. [
Footnote 6] Under the challenged statute, defendant had
opportunity to support the contract rates and to test before the
commission and in the state supreme court,
Page 300 U. S. 114
as others did, the validity of the filed schedules. [
Footnote 7] It failed to do so. And it
here insists that the contracts could not be abrogated "without a
proper hearing, finding and order of the commission with respect
thereto." It does not, and reasonably it could not, contend that
immediate exertion by the legislature of the State's power to
prescribe and enforce reasonable and nondiscriminatory rates
depends upon or is conditioned by specific adjudication in respect
of existing contract rates. [
Footnote 8] It is clear that, as against those specified
in the contract here involved, the rates first filed by plaintiff
and those promulgated by the commission in accordance with the
statute have the same force and effect as if directly prescribed by
the legislature. [
Footnote
9]
Lacking in merit is defendant's contention that the statute
violates the clauses of the Constitution invoked because held by
the court to require that, although before this suit the service
had been furnished and paid for in accordance with the contract,
defendant was bound to pay more. As shown above, the rates
specified in the schedules were held applicable from and after
their respective effective dates. Defendant was not injured by
plaintiff's failure to withhold service or more promptly to sue for
the difference between its lawful charges and the amount paid. It
cannot derive any advantage from refusal to pay. [
Footnote 10]
Plainly, enforcement of the rates in accordance with the statute
did not violate either the contract clause of
Page 300 U. S. 115
the Constitution or the due process clause of the Fourteenth
Amendment.
Affirmed.
[
Footnote 1]
Missouri R.S.1929, c. 33, § 5121
et seq.
[
Footnote 2]
Missouri R.S.1929, §§ 5190(12), 5209.
[
Footnote 3]
City of Fulton v. Public Service Comm'n, 275 Mo. 67,
204 S.W. 386;
Sedalia v. Public Service Comm'n, 275 Mo.
201, 209, 204 S.W. 497;
Kansas City Bolt & Nut Co. v. Light
& Power Co., 275 Mo. 529, 204 S.W. 1074,
aff'd,
252 U.S. 571;
State ex rel. Washington University v. Public
Serv. Comm'n, 308 Mo. 328, 342, 272 S.W. 971;
State ex
rel. Public Serv. Co. v. Latshaw, 325 Mo. 909, 917, 918, 30
S.W.2d 105;
State ex rel. Kirkwood v. Public Serv. Comm'n,
330 Mo. 507, 521, 50 S.W.2d 114.
[
Footnote 4]
Union Dry Goods Co. v. Georgia Public Service Corp.,
248 U. S. 372;
Producers Transp. Co. v. Railroad Commission, 251 U.
S. 228,
251 U. S. 232;
Kansas City Bolt & Nut Co. v. Kansas City Light & Power
Co., 252 U.S. 571;
Sutter Butte Canal Co. v. Railroad
Commission, 279 U. S. 125,
279 U. S.
137-138.
[
Footnote 5]
Public Serv. Comm'n v. Utilities Co., 289 U.
S. 130,
289 U. S.
135-136.
Cf. Northern Pac. Ry. Co. v. North
Dakota, 236 U. S. 585,
236 U. S.
604.
[
Footnote 6]
Armour Packing Co. v. United States, 209 U. S.
56,
209 U. S. 81;
Louisville & N.R. Co. v. Maxwell, 237 U. S.
94,
237 U. S.
97.
[
Footnote 7]
Missouri R.S.1929, §§ 5191, 5232-5237.
See State ex rel.
Washington University v. Public Serv. Comm'n, 308 Mo. 328, 272
S.W. 971.
[
Footnote 8]
Louisville v. Nashville R. Co. v. Mottley, 219 U.
S. 467.
[
Footnote 9]
Public Serv. Comm'n v. Pavilion Natural Gas Co., 232
N.Y. 146, 150, 151, 133 N.E. 427;
Town of North Hempstead v.
Public Service Corp., 231 N.Y. 447, 450, 132 N.E. 144.
[
Footnote 10]
Louisville & Nashville R. Co. v. Central Iron Co.,
265 U. S. 59,
265 U. S.
65.