Arkadelphia Electric Light Co. v. Arkadelphia

Kirby, J., (after stating the facts.) The city ordinance of 1909 is challenged as being void, because it impairs the obligation of the Company’s contract, and fixes such unjust and unreasonable rates as are confiscatory, and deprives the Company of its property without compensation. The first ordinance granting the franchise to the predecessor of the Company, to which it succeeded, was passed in 1904, after the enactment of sections 5445-5447 °f Kirby’s Digest (act of April 21, 1903), and this statute, authorizing cities and towns upon complaint filed to examine the rates charged consumers for electricity and determine whether they are reasonable, and “fix such prices to be paid for * * * electricity as they may deem to be a reasonable charge,” will be read into every contract to which it relates, made since its enactment. Lackey v. Fayetteville Water Company, 80 Ark. 128. The City had the power, under this statute, to examine the Company’s rates upon complaint made, and, finding the charges unreasonable, to fix such rates as it deemed reasonable, and the ordinance fixing the rates could not impair the obligation of any contract had with it by the Company or its predecessor made since the passage of the statute. The rates having been fixed by the city council, which is given authority to investigate and determine reasonable rates, the presumption is that they are reasonable, and the burden of proof is upon the Company to affirmatively show that they are not. Railway Company v. Gill, 54 Ark. 112. By act 282 of the Acts of 1905, section 1, all persons and corporations furnishing electricity to' consumers in cities of the first and second class, in case meters are furnished to their patrons for measuring such electricity, are required to supply printed tables to them semi-annually, on certain days, showing the price charged per thousand units for such electricity, and by section 2 are required to base their charges upon the reading of said meters and charge for same as per the printed tables furnished; and the bills or statements rendered patrons “shall show the number of units charged for.” In Little Rock Railway & Electric Co. v. Newman, 91 Ark. 92, the court, construing this act, said: “The manifest design of the act is to provide means whereby the consumer may be informed as to the exact charge for service, and to require uniformity of charges against all customers using like quantities of the commodity. * * * A regulation of the charges for such service should be just to the Company, as well as to all patrons, so as to allow compensation to the former, and reasonable, uniform rates to the latter, according to the amount of the commodity consumed. One class of patrons should not- be favored at the expense of another.” Under the proof in this case it appears that by the rates fixed in the ordinance of 1909, and applied by the Company, its gross revenues for nine months show an increase in fact over a like period of time under its voluntary rates amounting to $681.60. Estimating the value of the Company property upon which it is entitled to revenue at $16,000, the net revenue for the year ending September 1, 1909, amounted to $1,803.89, and the profit upon its electrical fixture supply business to $1,400; in all, $3,203.89. This last sum of money was realized from the capital of the Company invested and the labor of its employees paid by and charged to the -income derived from the sale of electricity by the Compan)'-, and should be estimated in determining the reasonableness of the rates fixed. The testimony shows that 10 per cent, is not an unreasonable amount to be set aside as a reserve or sinking fund for repairs and replacement, and, deducting that amount ($1,600) from said income, we have left $1,603, or a dividend of 10 per cent, upon the amount invested, which was the dividend one of the directors testified was being paid, and that the Company was also maintaining a reserve. If the value of the capital of the Company be estimated at the full $20,000, which it claimed was the amount of the paid-up stock, although its president could only -show the amount of $16,000 by his inventory, after deducting for replacement, there still remains enough to pay a dividend of 6 per cent. While, if the value of the plant was no greater than estimated by Dempsey, after deducting the 10 per cent, for replacement, we have remaining $2,099.39 or a dividend of 19 per cent. The Company is entitled to a reasonable return on the fair value of its property devoted to the public use. Wilcox v. Consolidated Gas Co., 212 U. S. 19, 53 L. Ed. 398. The legal rate of interest in this State is 6 per cent., and the contractual rate is 10 per cent., beyond •which lenders are not allowed to go in charging for their money, and the Company cannot complain of the rates as unreasonable and confiscatory that provide uniformity of charge for all customers -in accordance with the amount of the commodity actually consumed by each, and permit it to realize in any event more than the legal rate of interest on its investment, and probably the contractual rate' permitted by law, after deducting 10 per cent, as a reserve fund for replacement and renewal of the plant. Únder these rates, the Company is shown to have acquired more new patrons in the same length of time than under its own rates, and to have realized more revenue from the sale of its current to its consumers in acordance therewith than under the rate made by it, and it also provides a uniform rate of charges against all customers using like quantities of the commodity, and we hold that the presumption in favor of the reasonableness of the rates established by the City has not been overcome, and that the Company has failed to show by clear, convincing and unequivocal evidence, as the law requires it to do, that the rates fixed by the City are unreasonable and non-compensatory and effect a taking of its property without just compensation, and its complaint was properly dismissed. The decree is affirmed.