Puget Sound Power Light Co. v. Seattle , 172 Wash. 668 ( 1933 )

As stated in the majority opinion, this is a companion case toPacific Telephone Telegraph Co. v. Seattle, ante p. 649,21 P.2d 287. All but two of this appellant's objections to the ordinance in question were disposed of in that case. My dissent in that case applies with equal force here. Since the majority opinion discusses and disposes of the two additional questions, my dissent is likewise extended, inasmuch as I disagree with the majority upon both questions.

The first question deals with appellant's rights under its existing franchise. The appellant here already had a complete and unqualified operating franchise from the city to engage in and carry on the business of selling and furnishing electric light and power for hire in the city of Seattle until March 14, 1952. By virtue of that franchise, it had the express right to construct, maintain and operate its equipment and apparatus and to erect poles, wires and appurtenances for the distribution of electric light, heat and power in, over and under the streets and public places of the city. The grant was subject to repeal, change or modification for failure to operate in accordance with the provisions of the ordinance, or at all.

Relying upon that franchise, the appellant made large investments of money installing its plant and equipment and building up its service. It is now under the burden and duty of continuous operation. Its property is devoted to a public use. It can not cease its operations, nor has the city power to authorize it to cease doing business. A fortiori, the city can not alter or amend the contract to the detriment of the grantee by the imposition of additional burdens. Pacific Tel. Tel. Co. v.Everett, 97 Wash. 259, 166 P. 650; Hot Springs Electric LightCo. v. City of Hot Springs, 70 Ark. 300, 67 S.W. 761; LosAngeles v. Los Angeles Gas Electric Corp., 251 U.S. 32,64 L. Ed. 121; McQuillin, Municipal Corporations, Vol. 2, § 806.

In the Everett case, after stating that the municipality may, as a condition precedent to the use of its property, exact of the user such terms and conditions as it may deem necessary to impose, we said on p. 269:

"But it does not follow that the city may grant a franchise to a corporation to use its streets and other public places upon terms mutually agreed upon, and then afterwards during the life of the franchise annex additional burdens thereto without the consent of the grantee inconsistent with the rights granted. While it may not surrender the right of regulation necessary to the public health and safety, or the general taxing power (Const., art. 7, § 4), it can make a valid and binding contract concerning the terms upon which the grantee may make use of public places; such a contract as cannot be changed or altered at the will of the city without the consent of the other party thereto."

The crowning reason, in my opinion, for holding the ordinance inoperative and void as to this appellant is that it constitutes an unlawful exercise by the city of a governmental power in aid of its proprietary business. The city is a competitor of the appellant. Both are engaged in a similar business for profit. The appellant's franchise is not exclusive, hence it can not complain of competition. It may not even complain if the city should see fit to appropriate its property for public use by condemnation. But so long as appellant is permitted to function as a competitor, its property may not be taken from it without due process of law; and that, in effect, is just what the ordinance does. The validity of the tax must be determined by its true operation and effect on the basis of the results which follow its operation. Aberdeen Savings Loan Ass'n. v. Chase, 157 Wash. 351,289 P. 536, 290 P. 697, 71 A.L.R. 232; EducationalFilms Corp. v. Ward, 282 U.S. 379, 75 L. Ed. 400, 71 A.L.R. 1226.

In practical operation, the appellant must not only meet the competitive rates established by the city, but it must also comply with the regulations made by the department of public works regarding its rates. The city is under no such regulation, but has exclusive control of its own rates. If the appellant had no competition, it might secure from the state department the right to pass on to its customers the amount of the tax, upon a showing that its rate of return was insufficient to enable it to pay such tax. That attempt, however, would be futile so long as the city maintained a lower standard of rates. By the ordinance, the city has the right of inspection of appellant's books of account. If the power to enforce such a tax as prescribed by the ordinance be granted to the city, then the amount thereof can be fixed as the city pleases, and at such a figure as it may determine from appellant's own books will result in the elimination of appellant as a competitor.

Contrary to the view of the majority, I think that the following cases are applicable and controlling here, both as authority and in reason: Texas Electric Service Co. v. Seymour,54 F.2d 97; Great Northern Utilities Co. v. Public ServiceCommission, 52 F.2d 802; Los Angeles Gas Electric Co. v.Los Angeles, 241 Fed. 912 (affirmed in 251 U.S. 32). In the case last cited, the district judge, on p. 921, said:

"I am, however, also firmly of the belief that until the city, by purchase, appeal to eminent domain, or otherwise, has lawfully and properly and justly eliminated competition, it must meet its competitors as any other private agency would be compelled to meet them, and must stand with them in the same relation to the law, and let its success be measured by its ability satisfactorily to serve the public, rather than by its power through the exertion of public functions to occupy a position of supremacy in the field which it deliberately has chosen to invade."

If this ordinance be upheld, it will result in appellant being required to pay to the city approximately one hundred and twenty thousand dollars a year out of its gross earnings for the privilege of transacting business; while the city, even under the majority opinion, is entirely relieved of that handicap. It would therefore profit directly at the expense of its competitor. The city, having entered into a field of competition in its proprietary capacity, enters it under the law of the survival of the fittest, and may not, therefore, draw sustenance from its competitor through an assumption of public and governmental functions, to the strangulation of the one with whom it voluntarily competes.

I therefore dissent.