Tonopah Sewer & Drainage Co. v. Nye County

*176 OPINION By the Court, ORR, District Judge: The Tonopah Sewer Company, plaintiff in the court below, brought this action against Nye County to recover the sum of $832. Said sum being claimed for sewer service furnished certain departments or buildings of Nye County, to wit, Nye County courthouse, Ny» *177 County hospital, and Nye County public library. The lower court entered j udgment in favor of the sewer company, and from said judgment Nye County has prosecuted this appeal. It is the contention of appellant that it is not liable for sewage service furnished said public buildings because of an exemption from such payment, contained in a certain franchise contract entered into by the county commissioners of Nye County and one F. S. Lack, predecessor in interest of the sewer company. The franchise contract was entered into May 1, 1905, and was ratified by the legislature of the State of Nevada in the year 1911. In the franchise contract as entered into by the county commissioners and Lack and as later ratified by the legislature, there appears in the schedule of rates fixed this provision: “Schoolhouses and public buildings, free use given.” On January 23, 1922, the public service commission of the State of Nevada, pursuant to proceedings duly and regularly had, fixed a rate of $84 for the Nye County courthouse, $20 for the Nye County hospital, and $5 for the Nye County public library. The important question in this case is: Did the public service commission have jurisdiction and authority to fix and authorize such rates in view of the contract theretofore mentioned ? It is our opinion that it had. There is no longer any question but that a state may enlarge, modify, diminish, or set aside the acts of a municipality or one of its political subdivisions, without their consent. This is based upon the theory that the state is supreme and the action of the state in so doing is binding upon the municipality or political subdivision. Pawhuska v. Pawhuska Oil & Gas Co., 250 U. S. 394, 39 S. Ct. 526, 63 L. Ed. 1054; City of Trenton v. State of New Jersey, 362 U. S. 182, 43 S. Ct. 534, 67 L. Ed. 937, 29 A. L. R. 1471; City of Salem v. Salem Water, Light & Power Co. (C. C. A.) 255 F. 295; Laramie County v. Albany County, 92 U. S. 307, 23 L. Ed. 552; Hunter v. City of Pittsburgh, 207 U. S. 161, 28 S. Ct. 40, 52 L. Ed. 151; City of Sapulpa v. Oklahoma Natural Gas Co., 258 U. S. 608, 42 S. Ct. 316, 66 L. Ed. *178 788. The state may exercise this right through its duly constituted commission, by delegating the authority to it. A number of recent cases hold that the commission in the exercise of this authority may annul a provision in a franchise contract providing for free service to be performed by a public utility. Winfield v. Public Service Commission of Indiana, 187 Ind. 53, 118 NE. 531; City of Hillsboro v. Public Service of Oregon, 97 Or. 320, 187 P. 617, 192 P. 390; Springfield Consolidated Water Co. v. City of Philadelphia, 285 Pa. 172, 131 A. 716; New Orleans v. New Orleans Water Works, 142 U. S. 79, 12 S. Ct. 142, 35 L. Ed. 943; Western Oklahoma Gas & Fuel Co. v. City of Duncan (Okl. Sup.), 251 Pa. 37. If the State of Nevada had unqualifiedly delegated to its public service commission the right to control and regulate rates, we might stop here. However, we find in the legislative acts of 1911 (Stats. 1911, c. 162) and 1919 (Stats. 1919, c. 109) this provision: “This [speaking of power delegated to commission] * * shall not have the effect of suspending, rescinding, invalidating, or in any way affecting contracts existing on March 23, 1911.” The franchise contract, as ratified, was in existence at the time of the creation of the public service commission. Now the inquiry is: Does the changing of the rate relative to the said Nye County public buildings violate the said franchise contract as ratified? It is clear that the fixing of a charge for sewer service rendered said public buildings would be contrary to the terms of the original contract as entered into by the county commissioners and F. S. Lack, but in ratifying the contract the state saw fit to make important changes therein. Under the well-established law, the state possessed the power to do this. See authorities hereinbefore cited. The contract as entered into by the county commissioners and F. S. Lack in 1905 became merged in the contract as ratified by the legislature in 1911, and it is with the ratified contract we are compelled to deal. In ratifying the 1905 contract, the state reserved to its duly constituted public service commission *179 or similar body the right to change any of the rates fixed in the schedule found in said ratified contract. It then follows that the public service commission, in establishing the rate on the public buildings in question here, acted not only in accordance with the power vested under the acts creating it, but in accordance with the contract itself. Under the power reserved to the commission by the ratified contract, there can be no question that the commission had jurisdiction to change the rates for private buildings, and the very same right in the very same terms exists as to the public buildings enumerated. There is a provision in the ratified contract, not a part of the schedule of rates, which purports to give free sewer service to the buildings belonging to the town of Tonopah. With that provision we have no concern, as the buildings in question here do not belong to the town of Tonopah, but to Nye County. The contention that the public service commission was without authority to fix the rate for service furnished the public buildings in question is without merit. It is urged that the bringing of this suit was premature, because the order of the commission fixing the rate had not become final and that said rates had been suspended. This contention is based on the fact that the commission, after having ordered the rates put into effect, had granted a rehearing. The sewer company sought to initiate a new schedule of rates. It gave the required notice and made the required posting. Before •the date set for the new schedule, as proposed by the sewer company, was to become effective, the public service commission suspended them in order to permit a hearing thereon. A hearing was had and an order issued by the commission retaining in effect the old schedule, that is, the schedule in effect before the sewer company attempted to make the change, with the exception that authorization was given the sewer company to make the charges for service rendered the public buildings hereinbefore enumerated. This order of the commission was made effective January 23, 1922. Subsequent to the making and putting in effect of the rates *180 the respective parties petitioned for a rehearing which was granted. A rehearing, however, was never had. We do not believe, in view of section 32 of the public service commission act. (Statutes 1919, c. 109), that the filing of a petition for a rehearing and the order granting same had the effect of suspending the operation of the rates theretofore established by the order of January 23, 1922. To cause such a suspension would require a direct and specific order of the commission. Section 32 provides that the rates fixed by the commission are in force until set aside, changed or modified by the commission, or by a court pursuant to section 33. No such order was made either by the commission or by a court. The rates became effective pursuant to an order of the commission. For a suspension to have taken place more must have occurred than the filing of the petition for rehearing and an order granting it. Some express order of suspension was necessary, and we find no provision for it in the order of the commission granting a rehearing, nor is there evidence of such intention on the part of the commission in any of the proceedings before us. It is also urged that the rates fixed by the commission are exorbitant and unreasonable. That question is collateral to the inquiry before us. The law provides the course to be pursued in the event a party is dissatisfied with the findings of the commission. It is no part of this proceeding, and we cannot entertain it. The judgment1 is affirmed. Note — Sanders, C. J., being disqualified from sitting in this case, the Governor designated Hon. William E. Orr, District Judge, to act in his stead.