Law v. Railroad Commission

LENNON, J.

The questions in this case are before this court as the result of an order to show cause in response to a petition for a writ directing a review of an order of the

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Railroad Commission alleged to be violative of certain constitutional rights of petitioner.

In May, 1910, the petitioner and one Frederick G. Cartwright entered into a written contract, for a period of twenty years, whereby said Cartwright agreed to furnish steam and electricity for purposes of heating, power, and illumination in a building in the city of San Francisco owned by petitioner. The commodities furnished were to be paid for by petitioner at certain rates set forth in the contract and, in addition, Cartwright was granted the right to use free of charge parts of said building and premises belonging to petitioner. The right thus granted included the privilege of using certain wells, a smokestack, a steam and water circuit extending from said building under the streets of the city to another building, and the right of constructing and maintaining tanks on the roof of the building and of installing and maintaining motors, pumps, and pipes in the basement of the building. Cartwright assigned this contract to the Great Western Power Company. Subsequent to the assignment the present Railroad Commission of the state of California was created, the Public Utilities Act of 1915 was passed, and the Great Western Power Company, considered as a corporation furnishing heat, became a public utility under said • act. In May, 1920, the Railroad Commission made an order wherein it directed that all steam-heating consumers should be charged upon a uniform basis for heating service, approved certain schedules of rates for steam-heating service, and, in effect, prohibited deviations from said schedule under existing contracts providing different rates. Petitioner complains of this order is so far as it affects his rights under his contract.

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There is no longer any question as to the power of a state to fix rates for a public utility service which will supersede rates for such service previously fixed by private contract between the consumer and the company. It has been conclusively settled that the interference with private contracts by the state regulation of rates is but a legitimate effect of a valid exercise of the police power which neither impairs the obligation of a contract nor deprives of property without due process of law.