Home Tel. & Tel. Co. v. Los Angeles, 211 U.S. 265 (1908)
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Home Telephone and Telegraph Company v. Los Angeles
No. 173
Argued October 21, 1908
Decided November 30, 1908
211 U.S. 265
APPEAL FROM THE CIRCUIT COURT OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF CALIFORNIA
Syllabus
Only the legislature of a state, or a municipality specifically authorized thereto by the legislature, can surrender by contract a governmental power such as fixing rates. To grant a corporation the right to charge a specified rate for a specified time suspends for such period the governmental power of fixing and regulating rates, and in construing a franchise, all doubts, both as to existence of contract and authority to make it, must be resolved against such suspension of power.
Whether an inviolable contract for rates exists must be determined in each case on the particular facts involved; even slight differences may turn the balance.
A power given by the state to one of its municipalities to "fix and determine rates" does not authorize that municipality to abandon the power and to irrevocably establish rates for the entire period of a franchise.
Rate regulation is a legislative, and not a judicial, function, and quaere whether notice and hearing are necessary to constitute due process of law in fixing rates. Where notice and hearing are indispensable to due process of law, even though the charter does not require it, an ordinance will not be declared unconstitutional at the instance of parties who actually had notice and an opportunity to be heard, as depriving them of property without due process of law within the meaning of the Fourteenth Amendment.
In this case, objections to a municipal ordinance requiring a telephone company to report expenditures and receipts are untenable.
A city council is not disqualified from acting in rate regulation because the city is a heavy ratepayer or because the members might be politically affected by their action.
The rule that every presumption is in favor of the validity of legislation applies to a city ordinance, and it will not be held to be unconstitutional within the meaning of the Fourteenth Amendment, as denying the equal protection of the laws, where the party attacking it as imposing unequal rates upon it does not clearly show an improper classification.
This Court will not consider the legality or effect of a provision in a city charter for submission of ordinances adopted by the common council to the people on the petition of a specified number of voters when the ordinance involved was not so submitted.
The ordinances of the City of Los Angeles fixing telephone rates held not to be unconstitutional either as impairing the obligation of the contract contained in the franchise, as depriving the corporation affected of its property without due process of law or as denying it the equal protection of the law.
155 F. 554 affirmed.
The facts are stated in the opinion.