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CITY OF PAWHUSKA v. PAWHUSKA OIL & GAS CO. , 250 U.S. 394 (1919)

U.S. Supreme Court

CITY OF PAWHUSKA v. PAWHUSKA OIL & GAS CO. , 250 U.S. 394 (1919)

250 U.S. 394

No. 281.

Argued March 25, 1919.
Decided June 9, 1919.

[250 U.S. 394, 395]   Mr. Preston A. Shinn, of Pawhuska, Okl., for plaintiff in error.

Mr. T. J. Leahy, of Pawhuska, Okl., for defendant in error.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

A city in Oklahoma is complaining here of an order of the corporation commission of the state, made in 1917, regulating the rates and service of a gas company engaged in supplying natural gas to the city and its inhabitants. The company has a franchise, granted by the city in 1909, which entitles it to have its pipe lines in the streets and alleys of the city and provides that the gas shall be supplied at flat or meter rates, at the option of the consumer, and that the rates shall not be in excess of fixed standards.

When the franchise was granted there was a provision in the state Constitution (article 18, 7) reading:

And there also was a statutory provision (Rev. Stat. 1903, 398; Rev. Laws 1910, 593) declaring:

In 1913 the state Legislature adopted an act providing that the corporation commission 'shall have general super [250 U.S. 394, 396]   vision over all public utilities, with power to fix and establish rates and to prescribe rules, requirements and regulations, affecting their services.' Laws 1913, c. 93, 2. It was under this act, and after a full hearing on a petition presented by the gas company, that the order in question was made. The od er abrogates all flat rates, increases the meter rates, requires that the gas be sold through meters to be supplied and installed at the company's expense, and recites that the evidence produced at the hearing disclosed that the franchise rates had become inadequate and unremunerative and that supplying gas at flat rates was productive of wasteful use. On an appeal by the city the Supreme Court of the state affirmed the order. 166 Pac. 1058

The city contended in that court-and it so contends here-that at the time the franchise was granted it alone was authorized to regulate such charges and service within its municipal limits, that the Legislature could not transfer that authority to the Corporation Commission consistently with the Constitution of the state, and that in consequence the act under which the commission proceeded and the order made by it effected an impairment of the franchise contract between the city and the gas company in violation of the contract clause of the Constitution of the United States. Or, stating it in another way, the contention of the city was and is that the authority to regulate the rates and service, which concededly was reserved at the time the franchise was granted, was irrevocably delegated to the city by the Constitution and laws of the state, and therefore that the exertion of that authority by any other state agency, even though in conformity with a later enactment of the Legislature, operated as an impairment of the franchise contract.

Dealing with this contention the state court, while fully conceding that the earlier statute delegated to the city the authority claimed by it, held that this delegation was [250 U.S. 394, 397]   to endure only 'until such time as the state saw fit to exercise its paramount authority,' that under the state Constitution the Legislature could withdraw that authority from the city whenever in its judgment the public interest would be subserved thereby, and that it was effectively withdrawn from the city and confided to the corporation commission by the act of 1913. The claim that this impaired the franchise contract was overruled.

It is not contended, nor could it well be, that any private right of the city was infringed, but only that a power to regulate in the public interest theretofore confided to it was taken away and lodged in another agency of the state-one created by the state Constitution. Thus the whole controversy is as to which of two existing agencies or arms of the state government is authorized for the time being to exercise in the public interest a particular power, obviously governmental, subject to which the franchise confessedly was granted. In this no question under the contract clause of the Constitution of the United States is involved, but only a question of local law, the decision of which by the Supreme Court of the state is final.

In Dartmouth College v. Woodward, 4 Wheat. 518, 629-630, 659-664, 668, 694, it was distinctly recognized that as respects grants of political or governmental authority to cities, towns, counties, and the like the legislative o wer of the states is not restrained by the contract clause of the Constitution; and in East Hartford v. Hartford Bridge Co., 10 How. 511, p. 533 (13 L. Ed. 518), where was involved the validity of a state statute recalling a grant to a city, theretofore made and long in use, of power to operate and maintain a ferry over a river, it was said, that the parties to the grant did not stand--

In New Orleans v. New Orleans Waterworks Co., 142 U.S. 79 , p. 91, 12 Sup. Ct. 142, p. 147 (35 L. Ed. 943), where a city, relying on the contract clause, sought a review by this court of a [250 U.S. 394, 399]   judgment of a state court sustaining a statute so modifying the franchise of a waterworks company as to require the city to pay for water used for municipal purposes, to which it theretofore was entitled without charge, the writ of error was dismissed on the ground that no question of impairment within the meaning of the contract clause was involved. Some of the earlier cases were reviewed, and it was said:

The principles announced and applied in these cases have been reiterated and enforced so often that the matter is no longer debatable. Covington v. Kentucky, 173 U.S. 231, 241 , 19 S. Sup. Ct. 383; Worcester v. Worcester Street Ry. Co., 196 U.S. 539, 548 , 25 S. Sup. Ct. 327; Braxton County Court v. West Virginia, 208 U.S. 192 , 28 Sup. Ct. 275; Englewood v. Denver & South Platte Ry. Co., 248 U.S. 294, 296 , 39 S. Sup. Ct. 100.

Writ of error dismissed.

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