Cedar Rapids Gas Light Co. v. City of Cedar Rapids

Headnotes

1. Constitutional Law — Contracts Clause Where a municipality possesses a general reserved power to regulate rates, limited only by the Fourteenth Amendment, a provision in a franchise ordinance that states a maximum price and a discount for prompt payment — expressed as the company's promise in consideration of the privileges granted — does not constitute a contract by the city that the price will be maintained high enough to permit that discount; the rate remains subject to the reserved power to regulate. 223 U.S. 655 (opinion of Holmes, J.)
2. Constitutional Law — Contracts Clause A municipal ordinance drawn in the form of a contract accepted by the franchisee is a contract and contains reciprocal undertakings, but it remains subject to the power retained by the city to regulate rates, and that power cannot be abridged by ordinance, resolution, or contract where state law so provides. 223 U.S. 655 (opinion of Holmes, J.)
3. Civil Procedure — Review of State Court Judgments (Rev. Stat. § 709) A writ of error to a state court under § 709 of the Revised Statutes does not, in a chancery case, have the effect of an appeal from a judgment in the federal courts, and does not open the evidence for reexamination by the Supreme Court; the established practice and decisions have been to the contrary. 223 U.S. 655 (opinion of Holmes, J.)
4. Civil Procedure — Scope of Federal Appellate Review Findings of a state court, whether at law or in equity, may depend upon questions that are reexaminable by the Supreme Court, such as the admissibility or sufficiency of evidence, or a conclusion that is a composite of fact and law; such questions, if properly saved, must be answered, and the Court may examine the evidence so far as necessary to answer them or to prevent evasion of the real issues. 223 U.S. 655 (opinion of Holmes, J.) (citing Kansas City Southern Railway Co. v. Albers Commission Co.)
5. Constitutional Law — Rate Regulation — Just Compensation Under a power to regulate rates, a franchise cannot be interpreted so that the most profitable return obtainable free from competition is protected by the Fourteenth Amendment, for that would nullify the power to regulate; nor can the power to regulate withdraw the protection of the Amendment altogether, for then the property would be nothing. The inquiry is not one of economic theory but of fair interpretation of a bargain, requiring a middle course between the extremes. 223 U.S. 655 (opinion of Holmes, J.)
6. Constitutional Law — Rate Regulation — Valuation of Public Utilities In fixing the value of a public utility's plant for rate-regulation purposes, the court properly takes into account that the plant is in successful operation, but it excludes good will or the advantage incident to the possession of a monopoly, so far as that advantage might be supposed to give the company the power to charge more than a reasonable price. 223 U.S. 655 (opinion of Holmes, J.) (citing Willcox v. Consolidated Gas Co., 212 U.S. 19, 52)
7. Constitutional Law — Rate Regulation — Standard of Review A very clear case is required to warrant reversal of a state court decree that, though final in form, merely postpones a decision on the merits of a rate regulation for further experience; where the state court fairly valued the plant, found a return exceeding six per cent, and reserved the utility's right to try the case again after the rate had been given effect, the Supreme Court will not reverse on the ground that the rate is confiscatory merely because, in some details, it might have treated the utility differently. 223 U.S. 655 (opinion of Holmes, J.)