Railroad Commission v. Cumberland Telephone & Telegraph Co.

Citations

• 212 U.S. 414
• 29 S. Ct. 357
• 53 L. Ed. 577
• 1909 U.S. LEXIS 1824

Syllabus

<p>Where diverse citizenship exists complainant .may assert in a suit in the Circuit Court oif the United States that rates fixed by ordinance are so low as to be' confiscatory under the Fourteenth Amendment or unreasonable or unjüst under the provisions of state law. Rates fixed by the body having jurisdiction, after investigation based on reports of the corporation rendering the 'service, are prima faxie fair and valid and the burden of proof is on the complainant attacking them to show that they are confiscatory or unreasonable.</p> <p>Where a public service corporation raises more money in a particular year than required for actual depreciation it cannot carry the excess to capital for the purpose of estimating the amount On which it is entitled to pay.dividends in determining whether a rate is unconstitutional as confiscatory, and the onus of showing that this has not been done is on complainant where the books show that such an ex- ■ cess has been collected.</p> <p>Quaere, and pot decided, whether it would be entitled to dividends on •'.such excess if invested in extensions and additions.</p> <p>While in some businesses where increased demand does not involve a corresponding increase in expense; increased profits may result from decreased rates, this rule does riot apply to a business, such as that of a telephone company, where expenses are proportionately increased with increased demand and service.</p> <p>Although complainant failed to prove its case, the bill will, not be dismissed but a new trial ordered, as the rates have been in force and the inquiry can be founded upon their actual effect.</p>