1919.]

Opinion, per CRANE, J.

[225 N. Y.]

A reasonable increase in rates in order to provide the money for these changed conditions is as much a benefit to the public as a reduction in rates when the charge is excessive. It is a bad political economist who thinks the public is always served best by that which is cheap.

The authorities also sustain this view of the law. A municipal corporation is simply a political subdivision of the state and exists by virtue of legislative enactments. Rate regulation is a matter of the police power of the state and the terms and conditions such as here in question contained in a franchise to a service corporation may be modified without impairing the obligation of a contract within the provisions of the Constitution. (Louisville & N. R. R. Co. v. Mottley, 219 U. S. 467, 480, 482; Texas & N. O. R. R. Co. v. Miller, 221 U. S. 408, 414; Buffalo E. S. R. R. Co. v. Buffalo Street R. R. Co., 111 N. Y. 132; City of Rochester v. Rochester Ry. Co., 182 N. Y. 99; affd., 205 U. S. 236; Portland Ry., L. & P. Co. v. City of Portland, 201 Fed. Rep. 119, 125.)

The second question is this: The legislature having power to regulate charges of this gas company to the consumers of the village of South Glens Falls, has it conferred this power upon the public service commission? Chapter 480 of the Laws of 1910, known as the Public Service Commissions Law, would seem to give this power. Subdivision 5 of section 66 reads:

"Whenever the commission shall be of opinion, after a hearing had upon its own motion or upon complaint, that the rates or charges or the acts or regulations of any such person, corporation or municipality are unjust, unreasonable, unjustly discriminatory or unduly preferential or in any wise in violation of any provision of law, the commission shall determine and prescribe the just and reasonable rates and charges thereafter to be in force for the service to be furnished notwithstanding that

[225 N. Y.]

Opinion, per CRANE, J.

[Jan.,

a higher rate or charge has heretofore been authorized by statute."

Section 72 provides:

An investigation may be instituted by the commission as to any matter of which complaint may be made, as provided in section seventy-one of this chapter, or to enable it to ascertain the facts requisite to the exercise of any power conferred upon it. After a hearing and after such an investigation as shall have been made by the commission or its officers, agents, examiners or inspectors, the commission within lawful limits may, by order, fix the maximum price of gas or electricity not exceeding that fixed by statute to be charged by such corporation or person, for the service to be furnished.

*

No statute has fixed the price of gas for this community. It seems quite clear to us, therefore, that the legislature having the power to regulate the charge to be made for gas by the United Gas, Electric Light and Fuel Company to the residents of the village of South Glens Falls has conferred this power by reason of the above provisions of law upon the public service commission and their action in dismissing the village's complaint was correct.

The Appellate Division based its decision upon the authority of Matter of Quinby v. Public Service Comm. (223 N. Y. 244). This case is not inconsistent or contrary to what is here stated. The matter there at issue was a railroad rate fixed by a city charter and contained in the street franchise to the company. We held that in view of article III, section 18, of the Constitution requiring the consent of the local authorities to the construction of a railroad that the power given to the public service commission to modify this rate should be distinctly and expressly conferred and that such power had not been given. It was said:

"In the absence of clear and definite language conferring without ambiguity jurisdiction upon the public

1919.]

Opinion, per MCLAUGHLIN, J.

[225 N. Y.]

service commission to increase rates of fare agreed upon by the street railroad and the local authorities we should not unnecessarily hold that the legislature has intended to delegate any of its powers in the matter, whatever its powers may be. The Public Service Commissions Law (Section 26, section 49, subd. 1) and the Railroad Law (Section 181) deal with maximum rates of fare established by statute but make no reference in terms to rates established by agreement with local authorities." (p. 263.)

The question as to the power of the legislature to deal with such rates was specifically reserved and not decided. The opinion clearly intimated that such power did exist.

For the reasons here stated the order of the Appellate Division should be reversed and that of the public service commission dismissing the complaint affirmed. Costs to the appellant in this court and in the Appellate Division.

MCLAUGHLIN, J. (concurring). I concur in the result reached by Judge CRANE.

The right to regulate rates of public service corporations is a governmental power vested in the state in its sovereign capacity. It may be exercised by the state, or through a commission appointed by it; or it may delegate such power to a municipality. The delegation of this power, however, is never implied since the effect is to extinguish, no matter for how short a time, pro tanto a power of the state. Therefore, when delegated its existence and the authority to make it must clearly and unmistakably appear. (Matter of Quinby v. Public Service Commission, 223 N. Y. 244.) Every doubt must be resolved in favor of the continuance of the power in the State (Home Telephone & Telegraph Co. v. Los Angeles, 211 U. S. 265; Wyandotte County Gas Co. v. Kansas, 231 U.S. 622.)

[225 N. VI

Opinion, per MCLAUGHLIN, J.

[Jan.,

Our attention has been called to no provision in the charter of the village of South Glens Falls by which it is claimed the power was given to such village to fix the maximum rate at which gas should be sold to consumers. It may be assumed that the charter gave to the village the right to make certain contracts necessary for its corporate existence, but this power did not include. the right to make a contract fixing the rate at which gas should be sold to the public. When the franchise was granted to the United Gas, Electric Light and Fuel Company, both it and the village were bound to take notice of the right of the state to step in at any time and fix a rate other than that stated in the franchise. The legislature by the creation of the public service commission delegated to that body the power to fix a rate, and this it may exercise whenever it sees fit to do so notwithstanding the provision of the franchise fixing the maximum price for a term of fifty years. The act of the village and the gas company in thus contracting, while it may have been binding upon the parties to it, had no effect upon the power of the state acting through the public service commission to which has been delegated all the power the state has in fixing rates at which gas can be sold to the public. The whole act creating the public service commission indicates as clearly as language can that the legislature intended to give to that body all the power necessary to fix a rate at which gas could be sold throughout the state. Thus article 1, section 4, of the Public Service Commissions Law provides that the commission shall possess the powers and duties specified in the act but "also all powers necessary or proper to enable it to carry out the purposes of this chapter." Article 4, section 66, subdivision 5, provides that "whenever the commission shall be of opinion, after a hearing had upon its own motion or upon complaint, that the rates or charges or the acts or regulations of any such

1919.]

Opinion, per MCLAUGHLIN, J.

[225 N. Y.]

person, corporation or municipality are unjust, unreasonable, unjustly discriminatory or unduly preferential or in anywise in violation of any provision of law, the commission shall determine and prescribe the just and reasonable rates and charges." And article 4, section 72, provides that after the hearing and after such investigation as shall have been made by the commission or its officers or agents "the commission within lawful limits may, by order, fix the maximum price of gas or electricity not exceeding that fixed by statute to be charged by such corporation or person, for the service to be furnished;

*. In determining the price to be charged for gas or electricity the commission may consider all facts which in its judgment have any bearing upon a proper determination of the question.

*

It is true that in article 7, section 61, subdivision 2, of the Transportation Corporations Law (L. 1909, ch. 219) the right of a public service corporation to lay conductors for conducting gas through the streets of a city or village is given, but this right cannot be exercised without the consent of the municipal authorities "under such reasonable regulations, as they may prescribe."

Reasonable regulations" does not include the right to fix a rate so that the state cannot interfere and fix a different one. (Wyandotte County Gas Co. v. Kansas, supra; Portland R., L. & P. Co. v. City of Portland, 201 Fed. Rep. 119; City of Benwood v. Public Service Commission, 75 W. Va. 127; Milwaukee Electric R. & Lt. Co. v. Railroad Commission, 153 Wis. 592. See, also, People ex rel. N. Y. & N. S. T. Co. v. Public Service Commission, 175 App. Div. 869; People ex rel. Bridge Operating Co. v. Public Service Commission, 153 App. Div. 129.) If this view be correct, then it necessarily follows that there is at the present time lodged in the public service commission the power to fix a rate at which gas shall be sold by the appellant.