Morrell v. . Brooklyn Borough Gas Co. No. 1 , 231 N.Y. 398 ( 1921 )

The defendant manufactures and sells gas in the thirty-first ward of the borough of Brooklyn, city of New York, including all of Coney Island. By chapter 125 of the Laws of 1906 the maximum rate of $1.00 per thousand cubic feet was fixed as the price of gas and by chapter 604 of the Laws of 1916 and chapter 666 of the Laws of 1917 the rate was lowered to $0.80 per thousand cubic feet on and after July 1st, 1916. This rate being confiscatory by the estimates of the defendant, an action was brought in the Supreme Court, New York county, against the public service commission and others to have it so declared. This case, known asBrooklyn Borough Gas Co. v. Public Service Commission (17 State Dept. Rep. 81), was referred to Hon. Charles E. Hughes who decided, after hearing, that the $0.80 rate was a taking of the defendant's property without a fair and reasonable return and that the act fixing the rate was unconstitutional and void; it was no longer in force and effect. The referee was also of the opinion that the act of 1916 fixing the maximum of $0.80 had repealed the act of 1906 fixing the rate at $1.00. Both rates could not be maximums so the legislature must have intended a repeal of the earlier provision. No rate, therefore, being limited by legislative enactment, what charge was the gas company authorized to make? It seems quite clear that the Public Service Commissions Law applied and that the commission could fix rates as to it seemed reasonable. This is what the commission did do. After many preliminary proceedings in court, which need not now be referred to, the defendant applied to the public service commission for a rate, reasonable under all circumstances, which was fixed at $1.40 per thousand cubic feet on and after August 1, 1920.

This action was thereafter commenced by the plaintiff as a resident of the thirty-first ward and a purchaser of gas to restrain the defendant from charging this $1.40 rate on the ground that the public service commission had no power to increase a rate over that fixed by the law of 1916, declared void as above stated. The Special Term in granting the preliminary injunction realized that if the commission could not fix a rate, if the company could not file its own schedule of rates and if the rate fixed by the law-making power was void, that the customer must get gas for nothing or go without it. The only alternative was for the court to assume the power which it accordingly did and fixed the rate at $1.15 as a reasonable charge. We find nothing in the laws or in authorities to justify such action. The Public Service Commissions Law covers the whole question. The company, by section 66, may file its own schedule of rates and change of rates. The public service commission on complaint or of its own motion may modify the charges.

Here on application of this company, the commission fixed the rate at $1.40. It is only where a rate has been fixed by statute that the commission cannot increase it. The only law was that of 1916 which had been declared null and void, so that there was not this limitation upon the commission. The case of People ex rel.Municipal Gas Company v. Public Service Commission (224 N.Y. 156), therefore, does not apply.

The order appealed from should be reversed, with costs in all courts, and motion for injunction denied, with ten dollars costs; the first question certified answered in the negative, and the second and third in the affirmative.

HISCOCK, Ch. J., HOGAN, CARDOZO and ANDREWS, JJ., concur; POUND, J., absent; CHASE, J., deceased.

Order reversed, etc.