text:
    CITY OF FULTON, Appellant v. PUBLIC SERVICE COMMISSION et al.
    In Banc,
    June 13, 1918.
    1. PUBLIC SERVICE COMMISSION: Power to Fix Telephone Rates. The Public Service Commission has power by order to fix telephone charges at rates exceeding máximums prescribed in a franchise granted by a city ordinance to a telephone company prior to the enactment of the Public Service Act of 1913. Such an order does not impair the obligation of contracts evidenced by such ordinance. [Overruling State ex rel. City of St. Louis v. Laclede Gaslight Co., 102 Mo. 472, so far as conflictive.]
    2. -: -: Impairment of Individual Contracts: Police Power. All contracts made for individual subscribers by the city with, a public service telephone company, through' the medium of ordinances, are made in contemplation of the State’s power to fix rates. Individuals cannot abridge the police power, but all such contracts are made subject to revision by an exercise of that power by the State, and its exercise does not impair the obligations of such individual subscribers.
    Appeal from Cole Circuit Court. — Hon. J. Q. Slate, Judge.
    Affirmed.

      E. L. McCall and A. T. Dumm for appellant.
    (1) The ordinance contract is an agreement upon charges for service — hence not to be considered as an ordinance “to fix” and determine the charges; a contract which cannot be impaired by a subsequent law of the State, fixing higher rates. The telephone company having received the benefits accruing to it, for a period of seventeen years, by the performance, on the part of the City of Fulton of its obligations under ordinance franchise contract, is now estopped from denying the validity of said contract. State ex rel. City of St. Louis v. Gas Light Co., 102 Mo. 475. The Public Service Act from which the Commission claims the power to raise the rates established in the contract, franchise, is directly in violation of Section Ten of Article One of the Constitution of the United States, and Section Fifteen, Article Two, of the Constitution of Missouri, as the impairment of the obligation of a contract. Said Ordinance is a valid and subsisting contract between the telephone company and the city. (2) The Public Service Act of 1913 cannot be upheld as against this plaintiff, as. an exercise of the police power of sovereignty. Cooley’s Const. Lim., star p. 577, and cases cited; St. Louis v. Gaslight Co., 70 Mo. 69; Dillon’s Mun. Corp., sec. 303. The power to fix rates for the exercise of public franchise is a valid subject-matter of contract between the State and the person exercising such- public function, and when it has once been regulated and fixed by contract, the State and its representative are bound by the terms of the contract so made. Stone v. Loan & Trust Co., 116 U. S. 307. A. municipal assembly is a delegated agency of the State for purpose of local government. Within its lawful sphere its ordinances have the force of laws. It may also enter into contracts in pursuance of powers to that effect, and such contracts, when so made, are not subject to be impaired nor abrogated by subsequent laws against the will of the parties thereto. Springfield y, Eailroad, 85 Mo. 674; City of Kansas v. Corrigan,' 86 Mo. 67; City of California v. Bunceton Telephone Co., 112 Mo. App. 722. A contract between the State and a corporation created thereunder is formed in the grant and acceptance of the charter of corporate life and franchise; the acceptance of such charter completes its binding force and obligation upon the Legislature according to the terms thereof — and the Legislature cannot pass a law impairing the obligation of preexisting contracts — a fortiori. Cooley’s Constitutional Limitations, p. 241; College v. Woodward, 4 Wheat. 518; Yon Hoffman v. Quincy, 4 Wall. 430; Gas Co. v. Gas Co., 115 U. S. 683. Any act of either party to change the rates, would be impairing the obligation of a contract, and void; and the fact that said contract was made prior to the enactment of the Act of 1913 creating the Public Service Commission, places it under the protection of Section 15, Article 2, of the Constitution of Missouri. St. Louis v. Gas Light Co., 70 Mo. 97-98; Special Charter City of Pulton, Session Laws 1859, p. 264; Building Co. v. Tel. Co., 88 Mo. 272; State ex rel. v. Roach, 267 Mo. 317; Cooley, Const. Lim. (5 Ed.) 712.

      Alex Z. Patterson, General Counsel and James D. Lindsay, Assistant Counsel, for Public Service Commission.
    (1) The charter of the City of Fulton did not give it the power to fix rates for telephone service by an unalterable contract. The contract, effected by the passage of the ordinance and acceptance thereof, was .entered into by the city and the company subject to the reserved right of the State to employ its police power to compel a change of rates when conditions should demand a change. Benwood v. Public Serv. Commission, 75 W. Ya. 127, L. R. A. 1915C, 261; State ex rel. Webster v. Superior Court, 67 Wash. 37, L. R. A. 1915C, 287; City of Woodburn v. Public Service Commission, 161 Pac. (Ore.) 391, L. R. A. 1917C, 98; Yeatman v. Towers, 126 Md. 513; Dawson v. Dawson Telephone Company, 137. Ga. 62; North Wildwood v. Public Utility Commission, 88 N. J. L. 81; Kenosha v. Kenosha Home Telephone Company, 149 Wis. 338; Manitowoc v. Manitowoc & N. Traction Co., 145 Wis. 13; Duluth Street Railway Company v. Railroad Commission, 16.1 Wis. 245; Pioneer Telegraph & Telephone Co. v. State, 33 Okla. 724; Marquis v. Polk Co. Telephone Co., 158 N. W. (Neb.) 927; City of Emporia v. Emporia Telephone Company, 88 Kan. 443, 90 Kan. 118; Milwaukee Elec. R. & Lt. Co. v. Railroad Commission, 238 U. S. 174; Wyandotte Co. Gas Company v. State of Kansas, 231 ,U. S. 622; Home Telegraph & Telephone Company v. Los Angeles, 211 U. S. 265; Stanilaus County v. San Joaquin Co., 192 U. S. 201; Freeport Water Company v. Freeport City, 180 U. S. 587; Rogers Park Water Company v. Fergus; 180 U. S. 624. (2) Corporations created by the State for public service or for governmental purposes, cannot, by contracts upon subjects within the regulatory and restrictive powers of 'the State, remove those subjects from the dominion of the State. The contract carries with it the infirmity of the subject-matter. State ex rel. Wabash Railway Company v. Public Service Commission, 271 Mo. 270; Tobacco Company v. St. Louis, 247 Mo. 374; Duluth Street Railroad Company v. Railroad Commission, 161 Wis. 245; Louisville & Nashville Railroad Company v. Mottley, 219 U. S. 467; Yeatman v. Towers, 126 Md. 513; Portland Railway, L. & P. Co. v. Railway Commission, 229 U. S. 397; Railroad v. Minneapolis, 232 U. S. 430. (3) Authority to fix rates of public service corporations is a legislative function and prerogative of the State, and a surrender of this sovereign right can be found to have been made only by virtue of a. grant so absolute, and unequivocal in its terms that no doubt can be entertained as to its meaning. Milwaukee Elec. R. & Light Co. v. Railroad Commission, 238 U. S. 174; Home Telephone & Teleg. Co. v. Los Angeles, 211 U. S. 265; Benwood v. Public Service Commission, 75 W. Ya. 127, L. R. A. 1915C, 1. c. 266; Stanilaus v. San Joaquin etc. Co., 192 U. S. 201,'210; Freeport Water Co. v. City of Freeport, 180 U. S. 587. (4) Municipal' corporations possess and can exercise only such powers: (a) as are granted to them im express words, or (b) are necessarily or fairly implied in or incident to the powers expressly granted, or (c) are essential to the declared purposes of the corporation, not simply convenient, but indispensable. City of St. Louis v. Bell Telephone Company, 96 Mo. 628; 1 Dillon, Municipal Corporations (3 Ed.), sec. 89. (5) The City of Fulton, under its charter, had no power: (a) To fix rates by compulsion. State ex rel. Garner v. Tel. Co., 189 Mo. 83; Union Electric L. & P. Co. v. St. Louis, 253 Mo. 592; City of St. Louis v. Bell Telephone Co., 96 Mo. 623. (b) To fix, by contract, rates for an indeterminate period, sncli authority being neither expressly granted, nor necessarily implied, nor indispensable. Section 10, Charter of City of Pulton, Laws 1859, pp. 263-4-5; Benwood v. Public Service Commission, L. R. A. 1915C, 261.
   BLAIR, J.

The city appeals from an affirmance of an order of the Public Service Commission fixing telephone charges at rates exceeding máximums prescribed in a franchise granted by city ordinance in 1900 to the telephone company. It is stipulated that the only question involved is “the authority of the Public Service Commission of Missouri to order an increase of telephone rates and charges over the rates and charges provided for in Ordinance No. 62 of the City of Pulton.” Relator’s contention is that the order of the Commission impairs the obligation of the contract evidenced by the ordinance mentioned.

The question was decided in State ex rel. Sedalia v. Public Service Commission, 275 Mo. 201, and we adopt the ruling there made. The suggestion that the rights of individual subscribers are involved is answered by the rule that individuals cannot abridge the police power by contracts made under an ordinance subject to revision under that power. [Knoxville Water Co. v. Knoxville, 189 U. S. 434.] All such contracts necessarily are made in contemplation of the State’s power to;fix rates. This disposes of the idea that the revision of rates impairs the obligation of contracts.

In view of what is written in the Sedalia ease it is necessary to overrule State ex rel. St. Louis v. Laclede Gaslight Co., 102 Mo. 472, in so far as it- conflicts with' that decision. The result in that case was right on other grounds, as the record shows. Sloan v. Railroad, 61 Mo. 24, is not necessarily in conflict with the conclusion in the Sedalia case. The Sloan ease was based upon legislation enacted prior to the adoption of the Constitution of 1875.

The judgment is affirmed.

All concur.


source: Caselaw Access Project

author: WILLIAMS, J.

license: Public Domain

text:
    THE STATE ex rel. CHICAGO & ALTON RAILWAY COMPANY v. PUBLIC SERVICE COMMISSION et al.
    In Banc,
    June 13, 1918.
    1. RAILROADS: Signal Crossings and Gates: Do Not Include Interlocking Plant. A contract made by a railroad company which was about to construct its tracks across those of an existing railroad belonging to another company, by which the junior company agreed' to pay the entire costs of “crossing-signals or gates” thereafter at any time necessary to be erected and maintained, is not an agreement to pay the costs of erecting an “interlocking plant” at the crossing, since the words “crossing signals or gates” do not include an “interlocking plant;” and hence an order of the Public Service Commission, made upon the petition of the junior company, directing the installation of an interlocking plant and requiring the older company to pay a part of the cost, does not impair the obligation of such contract.
    2. -: Interlocking Plant: Apportionment of Costs: Train Basis: Unreasonable Order. Although the portion of the costs of erecting and maintaining an interlocking plant apportioned to appellant is somewhat too large if based alone on the average number of trains of each of two railroads daily passing the. crossing, yet if the evidence before the Public Service Commission reveals that at least two items were considered in arriving at the apportionment, namely, economy of crossing operation and safety, and the evidence concerning the proper items to be considered in apportioning the costs was .not fully developed, and a true solution will of necessity depend upon many items not disclosed, the court will not rule that the apportionment made by the Commission was unreasonable.
    Appeal from Cole Circuit Court. — Hon. J. G. Slate, ' Judge.
    Affirmed.

      Charles M. Miller for appellant.
    (1) . Tlie Public Service Commission erred in apportioning, under the contract between the two railroad companies, any part of the cost of construction, operation, and maintenance, of the interlocking- plant against the Alton Company, and the circuit court also erred in affirming the order of the Public Service Commission. Caldwell v. Layton, 44 Mo. 220; Bradshaw v. Bradbury, 64 Mo. 334; Pavey v. Bnrch, 3. Mo. 447; Davis & Eankin v. Hendrix, 59 Mo. App. 444; County of Johnson v. Wood, 84 Mo. 489; Carney v. Chillicothe W. & L. Co., 76 Mo. App. 536; Sachleben v. Wolfe, 61 Mo. App. 28; Stock Pood Co. v. Bridges, 160 Mo. App. 122; Belch v. Miller, 32 Mo. 387; Lumber Co. v. Dent, 151 Mo. App. 614; Patterson v. Camden, 25 Mo. Í3; Leonard v. C. & A. Ey. Co., 54 Mo. App. 293. (2) The order of the Public Service Commission impairs the contract between the two railroad companies and takes its property without due process of law, contrary to Sections 15 and 30 of Article 2 of the Constitution of Missouri, and Section 1, Article 14, of the Amendments to the Constitution of the United States.

      J. W. Jamison for respondent, Missouri, Kansas & Texas Eailway Company.
    (1) The proposed interlocking plant at the crossing of the two lines of railroad, consisting of numerous switches, derails, facing point locks, home signals and dwarf signals, with pipe connections mounted on anti-friction pipe carriers, the turns and angles in the pipe line to be made with rocker shafts, deflecting bars and cranks; pipe carriers to be of concrete equipped with iron tops; dwarf signals, home signals and electric distant signals to be mounted on iron masts; all signals to be mounted on well-designed, substantial concrete foundations; tract battery and signal battery to be housed in substantial concrete battery boxes; the tower for housing of the interlocking machine to be two stories high; tower to be made of monolithic concrete construction, etc.; interlocking machine to be located in the second story, etc., was not a “crossing signal “within the meaning of the old contract between the M. K. & T. Eailway Company and appellant. Grand Trunk Ry. v. Indiana Railroad Comm., 221 U. S. 400. (2) The order of the Public Service Commission, ordering the interlocker, and apportioning the cost thereof on an equitable basis as between the two lines of railroad, does not impair the provisions of the contract relied on by appellant, nor does it take appellant’s property without due process of law, con- . trary to any provision of the Constitution of Missouri, or of the Federal Constitution. State ex rel. M. K. & T. Ry. v. Public Service Comm., 221 Mo. 270; State ex rel. Wabash v. Public Service Comm., 271 Mo. 270; Tranbarger v. Chichago & Alton Ry. Co., 250 Mo. 46; Chichago & Alton Ry. Co. v. Tranbarger, 238 U. S. 67.

      Alex Z. Patterson, General Counsel, James D. Lindsay, Assistant Counsel for respondent, Public Service Commission.
    (1) The Public Service Commission has complete and exclusive power to prescribe the manner of crossing of one railroad by another railroad, and to require the installation, operation and maintenance of appropriate safety and other devices and appliances, including interlocking plants by railroads, and to determine and apportion the cost thereof. Sections 50 and 116, Public Service Act; State ex rel. M., K. & T. Ry. Co. v. Public Service Commission, 271 Mo. 270. (2) The power to require the installation of an interlocking plant at the crossing of one railroad by another railroad, and to apportion the cost between them, in an exercise of the delegated legislative power, which is independent of and unhampered by contracts between the companies concerned. It is compulsive and coercive in its nature, and in no wise contractual. State ex rel. M., K. & T. Ry. v. Public Service Commission, 271 Mo. 270; Grank Trunk Ry. v. Indiana Railroad Commission, 221 U. S. 400; Railroad v. Minneapolis, 232 U. S. 430; American Tobacco Co. v. St. Louis, 247 Mo.. 433; Northern Pacific Railway v. Duluth, 208 U. S, 583. (3) The subject-matter gf the contract upon which appellant relies, is one bf a public nature and of public service. By the Public Service Commission Act, it has been withdrawn from the possession and power of the railroad companies as a subject they may control by a contract between themselves. The contract, not having been executed by the parties before the State chose to act in the premises, has no longer a legal existence. The subject-matter of it has been destroyed by the Public Service Act. Therefore, it is unenforcible. L. & N. Railway Company v. Mottley, 219 U. S. 467. (4) The Legislature gave to the Public Service Commission exclusive jurisdiction over the entire subject of railroad crossings and construction of interloekers, but gave it no jurisdiction whatever to consider, to construe or to enforce contracts in respect of that subject, and a legislative attempt to grant the last named power would have been unconstitutional and futile. Lusk v. Atkinson, 268 Mo. 109; State ex rel. Mo. South R. R. Co. v. Public Service Com., 259 Mo. 704. (5) The order does not impair the obligation of the contract between the two companies, nor take' appellant’s property without due process of law in violation of any provision of State or Federal Constitution, because: (a) The order concerns the public safety, and the power of the State over that subject cannot be limited by the contracts of private interests on the same subject, (b) The obligation has failed by reason of this infirmity of subject-matter and of parties, (c) The contract was entered into subject to the unabridged police power of the State, peculiarly applicable to the subject in hand — the crossing of two public highways, (d) The obligation of such contract was conditional and could not extend to the defeat of or inference with, action by the State, on that subject. State ex rel. M. K. & T. Ry. v. Public Service Commission, 271 Mo. 270; Grand Trunk Ry. Co. v. Indiana Commission, 221 U. S. 400; Louis. & Nash. R. R. Co. v. Mottley, 219 U. S. 467; Milwaukee Elec. Ry. & L. Co. v. Commission, 238 IT. S. 174; Mo. Pac. Ry. Co. v. Omaha, 235 IT. S. 121; North. Pac. Ry. v. Duluth, 208 IT. S. 583; Addyston Pipe & Steel Co. v. United States, 175 U. S. 229; Scranton v. Wheeler, 179 U. S. 162; Atlantic Coast Line R. R. Co. v. Riverside Mills, 219 U. S. 202; Atlantic Coast Line R. R. Co. v. City of Goldsboro, 232 U. S. 558.
   WILLIAMS, J.

The proceeding which forms the basis of this review was originally instituted before the Public Service Commission lay the Missouri, Kansas & Texas Railway Company, wherein the Public Service Commission was aslced to make an order requiring the construction of an interlocking plant at the crossing at North Jefferson, Missouri, of the tracks of the Missouri, Kansas and Texas Railway Company and of the Chicago & Alton Railway Company, and further that the Commission apportion the cost of construction, maintenance and operation of said interlocking plant between the. two railway companies. After a hearing, the Public Service Commission ordered an installation of the interlocking plant, the estimated cost of which was $9624, and ordered that the cost of construction, together with the cost of maintenance and unkeep, be appropriated as follows:

To the Missouri, Kansas & Texas Railway Company, 71.4% thereof; to the Chicago & Alton Railway Company 28.6% thereof.

Upon certiorari, at the instance of the Chicago & Alton Railway Company, the order of the Public Service Commission was reviewed and affirmed by the circuit court of Cole County. • Thereupon the Chicago & Alton Railway Company appealed to this court.

In its answer before the Commission the Chicago & Alton Railway Company, hereinafter referred to as the appellant, alleged that lay virtue of a certain written contract entered into by and between itself and the predecessor of the Missouri, Kansas & Texas Railway Company, the sole cost of construction, maintenance and operation of the interlocking plant should be assessed against the Missouri, Kansas & Texas Railway Company; that to do otherwise would be to impair the obligation of said contract and to take appellant’s property without due process of law, all contrary to certain specified sections of both the State and Federal Constitutions.

It appears from the evidence that the appellant is the senior company and was operating a railroad at this point at the time the crossing contract in question was executed in 1892. Those sections of the contract here involved are as follows:

“Third. The said party of the second part [the predecessor of the M. K. & T. Ry. Co.] agrees that it will furnish the materials for and construct and put in all crossing-frogs, crossing-signals, gates and targets and other fixtures necessary to make the crossing with the existing tracks of the party of the first part [appellant herein] at the points aforesaid strictly in accordance with such plans and specifications as shall be prescribed by the chief engineer of the party of the first part, and that the said party of the second part will, at its sole cost • and charge, forever maintain and keep in good repair, and renew, from time to time when necessary, all the crossing-frogs, crossing-signals, gates and targets and other fixtures provided for in this indenture, whether of existing tracks or of such as may be hereafter laid by the party of the first part, all in such manner as shall be satisfactory to the said party of the first part. In the event that it does not make all such repairs or renewals when reasonably required so to do, the party of the first part may make the same, and the party of the second part agrees that it will promptly pay the party of the first part the full cost thereof.

“Fourth. If, at any time hereafter, the business of the party of the first part, or the laws of the State of Missouri or the ordinances of any municipal corporation of said State, shall make it necessary to station flagmen at the said crossings, or shall make it necessary or proper to erect crossing-signals or gates thereat, said party of the first part shall have the right to employ such flagmen and to establish such signals and gates, and the said party of the second part will pay the wages of such flagman or flagmen promptly as the same become due from time to time and the cost of the construction, maintenance and operation of such signals or gates. Any such flagman or flagmen shall he appointed by said party of the first part, but subject to the approval of the general superintendent or other managing officer of the party of the second part, and the said party of the second part shall have the right to require the discharge of such flagman or flagmen if there be good and sufficient reasons therefor, to be determined by its general superintendent or other proper managing officer, who shall state such reason in writing to the party of the first part, if -required.”

Upon the hearing, blue print maps and diagrams of the proposed interlocking plant, together with the engineer’s estimate of the cost thereof, were introduced in evidence. No issue is raised as to the merits of the plant which was ordered installed. The evidence shows that this system, to-wit, the Saxby & Farmer Interlocking System, has been in use for about thirty years, how extensively is now shown. It also appears from the evidence that an interlocking system is a greater instrumentality of safety than the method of' having gates at crossings or the law requiring trains to stop before passing over crossings; that methods other than the interlocking system depended more upon thfe human agency; that sometimes engineers in approaching crossings forget to bring their engines in under control, or the gateman sometimes forget to operate the gates, and that sometimes collisions occur at railway crossings; that the mechanism of the interlocking plant is such that when one track is made clear for traffic, derailing switches in the other crossing tracks are automatically operated, thereby making it impossible for trains to meet at such crossings; that the installation of an interlocking plant insures a safe operation of trains at the crossing point. The evidence further tends to show that the interlocking plant is justifiable as a matter of economy. That the cost of carrying the interlocking investment is less than cost of the train stops required at such points where an interlocking plant is not installed.

Mr. Harrop, the chief engineer of the Public Service Commission, testified that the usual- method of/ apportioning the cost of interlocking plants as promulgated by rule of the Railway Signal Association was upon what is known as the function or unit basis“that is the number of signals, derails, etc., on different tracks are the units that are made the basis for the apportionment of the cost between the companies.”

This witness further testified that the situation at the North' Jefferson crossing was such as to require more derails in appellant’s tracks than -in the tracks of the Missouri, Kansas & Texas Railway. This witness in applying the function basis to the apportionment of the cost stated that 'it would place against the appellant 57.9% and against the M., K. & T. Ry. Co., 42.1%. This witness further stated that the usual practice in dividing the cost of operation was to divide it equally between the two companies.. Mr. W. E. Williams, the general manager of the M., K. & T. Ry. Co., corroborated the testimony of Mr. Harrop as to the usual basis of apportioning the costs of construction and maintenance of an interlocking plant.

The evidence further shows that the M., K. & T. Railway Company averaged sixteen trains per day, and the appellant six trains per day over this crossing; that it was the main line of the M., K. & T. Railway Company, hut the branch line of the appellant; that the trains operated over the crossing by the M., K. & T. Railway Company were- much longer and heavier than the trains operated by the appellant; that all of the appellant’s trains stopped at this crossing for the purpose of taking on or receiving passengers or freight from the connecting line; tnat the trains of both railroads usually stood on the crossing while unloading passengers and freight at this point; that many of the M., K. & T. trains were through trains and would not stop at this crossing, bnt for the state law requiring them to so stop; that an interlocking plant would in many instances remove the necessity of stopping trains before 'going upon the crossing.

Further necessary reference to evidence will be made in the course of the opinion.

I. Appellant contends that the order of the Public Service Commission in imposing upon it a part of the cost of the construction, maintenance and operation of the interlocking plant impairs the obligation of the crossing contract executed in 1892.

In determining the question it is essential that we first examine the contract to see if it places an obligation for the payment of the cost of the construction, maintenance or operation of an interlocking plant. If it does not, then it necessarily follows that the order of the Commission apportioning such cost does not impair any obligation of such contract.

The contract provides: “If, at any time hereafter, the business of the party of the first part [appellant], or the laws of the State of Missouri or the ordinances of any municipal corporation of said State, shall make it necessary to station flagmen at said crossings, or shall make it necessary or proper to erect crossing-signals or gates thereat, said party of the first part shall have the right to employ such flagmen and to establish such signals and gates, and the said party of the second part will pay the wages of such flagman or flagmen promptly as the same become due from time to time and the cost of the construction, maintenance and operation of such signals and gates.” (Italics ours.)

If the term “interlocking plant” is included in the above contract it must be included within the phrase “crossing signals or gates.”

We have reached the conclusion that the phrase “crossing signals or gates” as used in the contract can in no proper manner be construed to include “interlocking plants.”

This exact point, or at least a point so closely analogous to the one here involved as to supply a valuable precedent in the instant case, was passed upon by the Supreme Court of the United States in the case of Grand Trunk Western Railway Company v. Railroad Commission of Indiana, 221 U. S. 400. In that case in construing a very similar contract the court said:

“The contract is set forth at length in the State court’s opinion and need not be reproduced here. It declares explicitly that the duty of constructing and properly maintaining the physical crossing of the two roads and bearing the expense incident thereto, shall rest with the junior road, but its only provision respecting what shall be done in the way of guarding the crossing is that ‘good and substantial semaphores or other signals, and . . . the requisite watchmen to take charge of and operate the same,’ shall be provided and maintained by that road at its ‘individual expense.’ There is no reference to an interlocking plant, nor any general language that would include one. The words ‘semaphores or other signals’ do not do so. An interlocking plant is so much more than a signaling device that it is quite beyond their usual meaning.”

Since the contract does not cover the expense imposed it is unnecessary to a determination of this case to decide whether the Public Service Commission in the exercise of the police power of the State can apportion a railway crossing expense contrary to the express terms of a contract. For that reason the latter point is not here further discussed.

II. Appellant makes the further contention that even though the contract be held not to control the situation, yet the order of the Commission, in imposing 28.6% of the cost upon the appellant, is unreasonable and unjust.

Upon the hearing appellant did not offer any evidence concerning the proper items to be considered in apportioning the costs of an interlocking plant. In its brief it says: “The conditions vary so in crossings that no rule can be established which would be uniform and just.”

The only evidence in the record tending to give a basis for apportionment of such expenses (that offered by the respondent company) would, if applied, fix the amount against appellant at 57.9% of the cost of construction and maintenance and 50% of the cost of operation. The order of the Commission apportioned only 28.6% against appellant.

The Commission evidently undertook to apportion the expense on the train basis; e. g., each railway company was assessed an amount in proportion to its share of the average total number of trains using the crossing. In this way the smaller percentage of cost (appellant having the smaller number of trains using the crossing) was assessed against appellant. The respondent railway company, against whom the larger assessment was laid, makes no complaint, so we have not to deal with the larger question of whether the train basis is the proper basis, but. only with the question as to whether the order as applied to appellant was unreasonable. Appellant contends that even though the train basis be the proper one, yet the amount assessed against it is too much'; that appellant’s proportion as fixed by the Commission is erroneous, because in arriving at the percentage the respondent railway company was charged with an average of only fifteen trains per day while the testimony shows the number to be sixteen.

The testimony before the Commission does show that the Missouri, Kansas, and Texas Eailway Company averaged sixteen trains daily over this crossing, and if the apportionment was to be determined on the train basis alone it would appear that appellant was assessed approximately $125 too much. But must the apportionment be based upon the train basis alone? There is no basis in this record for such a conclusion. While this record does not fully develop the different items that might be considered in arriving at a proper basis, yet two items are mentioned, to-wit, (1) economy of crossing operation and (2) safety.

As' to the item of economy of operating trains over the crossing it appears from the evidence that by the use of an interlocking plant many trains would be permitted to use the crossing without coming to a stop, as is required under present conditions, thereby saving the cost of stops thus eliminated. If this were the only item it would not perhaps be unjust to apportion the costs to each railroad in the proportion which the amount of money thus saved bore to the total amount thus saved by both railroads.

But can the same be said as to the second item, e. g., safety? It would be difficult to conceive of a collision at the crossing of two railroads unless both railway companies participated therein; that is to say, every time a collision occurs at such a crossing each railway company would have a train or part of a train involved. This being true it would appear that so far as this- item is concerned each railroad would share equally in the financial saving resulting from the elimination of crossing collisions.

Without here undertaking to state the true basis for such an apportionment (this because' the true solution would no doubt depend upon many items not disclosed by this record, and upon facts the existence of which lie without the range of judicial knowledge) we feel no hesitancy iu stating that the present record supplies appellant with no proper basis for complaint.

The judgment is affirmed.

All concur.


author: WALKER, J.

text:
    JOHN C. CARTER, Administrator of Estate of DELMAR RIDGEWAY, v. METROPOLITAN LIFE INSURANCE COMPANY, Appellant.
    In Banc,
    June 28, 1918.
    1. LIFE INSURANCE: Misrepresentation Statute: Simulated Applicant. The statute (Sec. 6937, R. S. 1909) declaring that “no representation made in obtaining or securing a policy of insurance on the life” of any citizen of this State “shall be deemed material, or render the policy void, unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due or payable,” does not apply to a policy procured by one simulating the applicant. The statute was designed to lessen fraud, not to increase it.
    2. -: -: -: Interpretation., The words of the statute limit the misrepresentations (1) to those expressed in the application “made in obtaining and securing” a valid policy, and (2) to matters which "actually contributed” to the insured’s death. It does not render immaterial a concealed condition which, had it been made known at the time of the applicant’s examination, would have precluded the issuance of the policy.
    3. -: Fraudulent Contract. A policy of life insurance, issued upon an application made by one who personated the applicant, having been conceived in fraud, may, for that reason, in an action on the policy, be shown to be fraudulent and therefore invalid.
    4. -: -: Pleading: General Denial. If nothing appears on the face of the petition to disclose the fraud on which the insurance contract was founded, and said contract is susceptible of formal proof without a showing as to its legality, the defense that no legal contract was made is not available under a general denial, but, to be available, the facts constituting its invalidity must be pleaded. •
    5. -: -:--: Joinder of General Denial With Special Defenses. The joinder of a general denial, separately stated, with a special answer and cross-bill is expressly authorized by statute.
    6. -: -: -: Cancellation: Conversion Into Equity. If the special answer and cross-bill aver with sufficient certainty the invalidity of the contract sued on, and the cross-bill, after stating proper grounds for affirmative relief, contains a prayer for the cancellation of the contract, the action at law is thereby converted into one in equity, and the case is to be heard by the court and not by a jury.

      Appeal from St. Louis City Circuit Court. — Hon. Kent K. Koerner, Judge.
    Reversed and remanded (with directions.)

      Fordyce, Holliday & White for appellant; William J. Tully, of counsel.
    (1) The court erred in sustaining plaintiff’s demurrer to defendant’s cross-hill. The averments of the cross-bill stated a cause of action in equity, based upon the fraudulent conduct of the plaintiff, and, if true, established conclusively that no valid contract of insurance had ever been entered into and that the policy on which plaintiff was suing should be canceled. Barrington v. Ryan, 88 Mo. App. 95; Whitmore v. Supreme Lodge, 100 Mo. 46; Pacific Mutual v. Glaser, 245 Mo. 390; Gardner v. North State Co., 163 N. C. 307; Southern States Co. v. Herlihy, 128 S. W. 94; Mutual Life v. Pearson, 114 Fed. 395; Bacon, Life & Accident Insurance (4 Ed.), sec. 194; 1 Joyce on Insurance (2 Ed.), secs. 99, 43-45; Schuermann v. Ins. Co., 165 Mo. 649; Keller v. Insurance Co., 198 Mo. 455; 9 Cye. 401. (2) The court erred in overruling the' defendant’s objection to trial by jury. Sec. 1807, R. S. 1909; Wendover v. Baker, 121 Mo. 273; Myers v. Schuchmann, 182 Mo. 159. (3) The court erred in ruling that the defendant under its general denial, was not entitled to introduce evidence to prove that no contract of insurance was ever entered into between Delmar Ridgeway and the defendant. Greenway v. James, 34 Mo. 328; Cavender v. Waddingham, 2 Mo. App. 551; Wilkerson v. Farnham, 82 Mo. 672.; Clemens v. Knox, 31 Mo. App. 185; White v. Middlesworth, 42 Mo. App. 373; Chapman v. Currie, 51 Mo. App. 40; Hellmuth v. Benoist, 144 Mo. App. 698; Southern States Co. v. Herlihy, 128 S. W. 94; Johnson v. Insurance Co., 181 Mo. App. 443; Young v. Glascock, 79 Mo. 576; Sprague v. Rooney, 104 Mo. 360.

      Frederick B. Bacon for respondent.
    (1) Before a loss, but not afterwards, an insurance company can bring an action in equity to cancel a policy alleged to have been obtained by fraud. After tbe death, however, no such right exists because the fraud, if any, can be pleaded as a defense, provided the facts bring it within the provisions of our statute as to misrepresentations made in obtaining a policy of life insurance; consequently the defendant in such case has a complete and perfect remedy at law. Schuermann v. Union Central Life Ins. Co., 165 Mo. 652; Kern v. American Legion of Plonor, 167 Mo. 471-488; Pacific Mutual Life Ins. Co. v. Glaser, 245 Mo. 377; Insurance Co. v. Cullen, 237 Mo. 557; Keller v. Home Life Ins. Co., 198 Mo. 440-453; Lynch v. Prudential Ins. Co., 150 Mo. App. 461; Cable v. U. S. Life Ins. Co., 191 U. S. 288; Riggs v. Union Life Ins. Go., 63 C. C. C. 365, 129 Fed. 207; Griesa v. Mutual Life Ins. Co., 94 C. C. A. 635, 109 Fed. 509. (2) The sustaining of the demurrer to the cross-petition of appellant was practically a judgment. The cross-petition is really a new suit and when a demurrer is sustained to the cross-petition the same result follows as if a demurrer had been sustained to a petition, and the defendant must either abandon his cross-petition, leaving judgment to be rendered on the demurrer, or filé an amended cross-petition. The matter which was demurred to as an answer and cross-petition can no longer be considered, nor can it be considered as an answer to the allegations of the petition. If defendant wishes to avail himself of them he must file an answer setting up the facts, because the sustaining of the demurrer eliminates the allegations of the cross-petition. Sec. 1811, R. S. 1909; Cardwell v. Stuart, 92 Mo. App. 586. (3) After the demurrer to the cross-petition was sustained, the only pleading of the defendant remaining was the general denial. If the defendant claimed that the issuance of the policy was obtained by fraud, the facts must be specially pleaded. Kern v. Legion of Honor, 167 Mo. 471; Welsh v. Ins. Co., 165 Mo. App. 233; Aloe v. Life Assn., 164 Mo. 675; Jenkins v. Ins. Co., 171 Mo. 383; Keller v. Ins. Co., 198 Mo. 440; Kelerher v. Henderson, 203 Mo. 498-511; State ex rel. v. Kennedy, 163 Mo. 518; 2 Cooley’s Briefs, 1176; Hilhurn v. Ins. Co., 140 Mo. App. 365; Burgess v. Ins. Co., 114 Mo. App. 189.
   WALKER, J.

This is an action brought by plaintiff as administrator on a life insurance policy, alleged to have been issued by defendant to one Delmar Ridge-way. Upon the sustaining of 'a demurrer to defendant’s answer, except as to its general denial, and its refusal to plead further, the plaintiff made formal proof and the court directed a verdict in his favor in the amount of the policy. Prom this judgment the defendant appeals.

The petition contains all the formal averments necessary to a pleading of this character.

The answer consists, first, of a general denial; second, a special defense, and cross-bill, that the policy was caused to be issued on the application of a person who falsely represented himself to be Delmar Ridge-way, and that defendant issued said policy relying upon such false and fraudulent representation; that the person who represented himself to be Delmar Ridgeway, and who signed the application for the policy, was not in fact Delmar Ridgeway, but fraudulently imposed upon the defendant in thus falsely representing himself in the procurement of said policy.

That the plaintiff, with intent to defraud the defendant, caused the alleged Delmar Ridgeway to apply for the policy and to undergo the required medical examination therefor, and furnished the money to pay the premium on the policy; that plaintiff fraudulently caused the alleged Delmar Ridgeway to execute a will purporting to he. the will of Delmar Ridge-way, bequeathing the policy to the plaintiff. . That five months after the issuance of the policy, Delmar Ridgeway died and plaintiff made application for and was appointed administrator, with the will annexed, of the estate of the deceased.

For a further' special defense and cross-bill, after pleading the foregoing affirmative defenses, defendant alleges that the application for insurance herein was not made in good faith by the alleged Delmar Ridge-way, for the beneficiary named in the policy, but was made at the instigation and request of the plaintiff- for his own use and benefit. That plaintiff paid the first semi-annual premium on the policy, and caused'the alleged Delmar Ridgeway to execute a will bequeathing the policy to the plaintiff. That the policy never was delivered to the alleged Delmar Ridgeway, but possession of same was fraudulently kept and maintained by the .plaintiff, and the plaintiff had no insurable interest in the life of the insured.

This is followed by a prayer for specific relief in that the policy be canceled, and for naught held, and that defendant be hence dismissed with its costs and for such other and further relief as to the court may seem proper.

Plaintiff’s demurrer to the first and second counts of the- answer, stated separately, was that neither constituted a defense to the petition, and if the facts stated therein were true, they showed that defendant had a full and complete remedy at law.

The case coming on for hearing, after the sustaining of the demurrer, as aforesaid, the plaintiff made formal proof of the issuance of the policy, the payment of the premium, the .death of deceased, the probating of the will of the latter, and the appointment of plaintiff as administrator. The defendant offered proof to sustain its general denial, and in support of its several special defenses, all of which testimony was excluded.

The matter having been heard before a jury, the court, at the instance of the plaintiff, gave the following peremptory instruction:

“The court instructs the jury that under the pleadings and evidence in this case the plaintiff is entitled to recover on the policy sued on in the'sum of five hundred dollars, less an unpaid semi-annual premium of $10.91, with interest on the balance from the time of the filing this suit, at the rate of six per cent.”

Defendant asked the following instructions, which were refused:

“The court instructs the jury that if you believe and find from the evidence that the application for the policy in this suit was not signed by Delmar Ridge-way, but, on the contrary, was signed by some other person, falsely and fraudulently representing himself to be Delmar Ridgeway, and that this fact was not known to the defendant, then your verdict must be in favor of the defendant.

‘ ‘ The court instructs ■ the jury that if you believe and find from the evidence that the plaintiff John C. Carter caused an application to be made for: a policy of insurance purporting to be upon the life of one Delmar Ridgeway and that the plaintiff caused an alleged Delmar Ridgeway to execute a last will and testament leaving the proceeds of said policy to the plaintiff and that the plaintiff was not a relative of said Delmar Ridgeway or dependent upon said Delmar Ridgeway or a creditor of said Delmar Ridgeway and had no insurable interest in the life of said Delmar Ridgeway, then your verdict must be in favor of defendant.”

The jury found in favor of the plaintiff, as directed by the court. From this verdict, after the overruling of its motion for a new trial, defendant appealed.

I. Primarily, the determination of the issue involved is dependent upon the construction of Section 6937, Revised Statutes 1909, which' provides: “No misrepresentation made in obtaining or securing a policy of insurance on the life or lives of any person or persons, citizens of this State, shall be deemed material, or render the policy void, unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due' and payable, and whether it so contributed in any case shall be a question for the jury.”

Plaintiff contends, and the trial court so held, that this section applies not only to policies procured through misrepresentations made by the applicant for insurance, but as well to those procured by one simulating the applicant. This is a rather startling proposition, and if the statute be so construed, its effect will be to render an insurance contract immune from a plea of invalidity for fraud, although obtained through false pretenses made by another than the insured, and without his knowledge. No amplification of words is necessary to the conclusion that such a construction, instead of lessening the possibility of fraud, as was evidently intended by the enactment of the section, will tend rather to promote the same. Aside, however, from this general conclusion, amply sustained by the rules of interpretation, a consideration of the nature of life insurance contracts and the conditions under which they are uniformly executed, will aid in determining the meaning, purpose, and consequent limitation of the section.

An examination of the applicant is a condition precedent to the issuance of a life insurance policy. Prom its terms, it is evident that this section was intended to be limited to the facts elicited in this examination in its providing that the misrepresentations referred to shall be those “made in obtaining or securing” the policy. The limitation is express, and under the rule embodied in the maxim of expressio unius, etc., other misrepresentations outside of or independent of such examination and which may affect the validity of the policy are excluded.

Viewed from another vantage the propriety of the restricted application of the section becomes apparent. It is in the nature of a limitation. As such, it can have no operative force unless there exists a policy otherwise valid upon which it can operate. An invalid policy has no legal existence and can form no basis for the operation of a limitation. As applied to the case at bar, it fob lows that before the section can be invoked to limit the effect of whatever misrepresentations may be pleaded as a defense to an action on the policy, the latter must be conceded to be otherwise valid. The result of this concession leaves nothing which can appropriately be interposed by the plaintiff in invoking the section, except such misrepresentations as may be charged to have been made by the insured in obtaining the policy; these, as we have shown, must be such as were made by him in his examination for the same.

Furthermore, the words employed in defining the materiality of the misrepresentations referred to in the section, are, in themselves, sufficiently definite to enable the character of such misrepresentations to be determined. The section prescribes that only such misrepresentations are material as contribute to the death of the insured; one which so contributes must be such an one, which, if it had not been made, the policy would not have been issued. To illustrate, the applicant answers falsely in regard to never having had a certain disease and that he is then in sound health. He dies soon thereafter of this disease. If he had answered truly, the issuance of the policy would have been precluded. False answers to any other material inquiries would have had a like effect in that they would have rendered the applicant an uninsurable risk. This but tends to emphasize the fact that the right of the insured to the policy is determined by his examination, and to such mispresentations, therefore, as are made therein, the section must necessarily have reference. What is meant by the section, in other words, is that no false statement made in the application for the policy shall avoid the same unless such statement concealed a condition which contributed to the death of the insured.

Otherwise construed, the validity of the policy in other respects is left out of consideration. No limit, except as indicated in. defining their materiality, is to be placed upon any representations made in securing the policy; and, although, they may involve the grossest and most despicable fraud, viz., the impersonation of another for the purpose of profiting by his death, and be independent and outside of the purported examination of the insured, the insurer is to be precluded from interposing them in defense to an action on the policy, unless it be alleged that they contributed to the death of the insured.

Such a construction is not in accord with a reasonable interpretation of the words employed. Its effect in the administration of the law of insurance under our statute would be to foster fraud. It outrages a righteous sense of justice and is, therefore, foreign to the intention of the Legislature in the enactment of the section. Given the restricted construction we have indicated, however, it serves a useful and practical purpose in placing a reasonable limit upon the effect of misrepresentations the interposition of which has been deferred until the insured is dead.

The construction of the section under the facts in issue is one of first impression in this State. Our reports are replete with cases discussing and determining the effect of various forms of misrepresentations in obtaining policies, but these are found to be limited to misrepresentations made by the applicants themselves and not by others.

The Supreme Court of Kentucky, in ruling upon a case (So. States Mutual Life Ins. Co. v. Herlihy, 138 Ky. 359, 128 S. W. 91) involving the defense made here of false personation of the insured in procuring the policy, says, in effect, that “although the company could not defeat a recovery upon the ground that the insured in the application made false and material answers, this did not deprive it of the right to show that the insured was not the person who made application for the insurance and who was, in fact examined; or that the insurance was procured as a part of a conspiracy between the insured and others who had no insurable interest in her life for the purpose of practicing a fraud upon the company. These defenses were based upon facts existing independent of the matter contained in the application. The failure to comply with the statute in pleading the application, denied the company the right to resist the payment of the policies upon defenses arising out of. the application. It did not prevent it from showing that in matters outside of the application the policies had been avoided. If a person other than the insured made the application and was examined, there was, of course, no contract between the company and the insured. And so, if the insurance was obtained as a part of a conspiracy entered into by persons having no insurable interest in the life of the insured, the contract was illegal, against public policy and non-enforceable. These two defenses the company made, and the lower court properly permitted wide latitude in the examination of witnesses whose evidence tended to support them.”

This case is apposite here because the rule announced therein, expressed in general terms, is exceedingly elementary and applicable alike to all obligations. It is that a. contract conceived in fraud has no legal existence and that this fact may be shown to defeat an action brought thereon (Pac. Mut. Life Ins. Co. v. Glaser, 245 Mo. 1. c. 390). Thus, it appears, aside from the inapplicability of Section 6937, supra, that the defense sought to be made by the defendant in its special answer and cross-bill, that no contract had ever been made between it and the insuréd, should have been permitted. The trial court therefore erred in sustaining the plaintiff’s demurrer.

II. The defense was based upon the theory that the contract was illegal in that- no real agreement had ever been entered into by the parties. If this fact be established, then the contention of the defend-an^ may sustained upon a broader principle than the determination of its rights, viz., that of public policy. But is this defense available under a general denial? Under our system of pleading' a general denial raises an issue as to each of the material allegations of the petition. [Sells v. Railroad, 266 Mo. 1. c. 177; Kelerher v. Henderson, 203 Mo. 1. c. 511.] In a certain class of cases, usually involving the right to the possession of property, and which do not distinguish between a general denial and tlje general issue, it is held that the defendant may prove any fact which goes to show that the plaintiff never had any cause of action. A. compilation' of this class of cases is to be found in Patton v. Fox, 169 Mo. 1. c. 106.

It was held in Sprague v. Rooney, 104 Mo. 1. c. 360, that the effect of a general denial is to deny the legality of a contract, sought to be enforced, and to authorize the admission of evidence, to show that the same, although on its face valid, was intended to accomplish an illegal object. This case was expressly overruled in McDearmott v. Sedgwick, 140 Mo. 1. c. 182, in which the following ruling was announced: Where there is nothing on the face of the petition to indicate other than a valid contract, if it is to be invalidated by some extrinsic matter, such matter must be pleaded. This ruling is in harmony with the current of anthorjty, not only in the earlier, but the later cases as well. [School Dist. v. Sheidley, 138 Mo. 1. c. 690; Bell v. Warehouse Co., 205 Mo. 1. c. 493; Shohoney v. Railroad, 231 Mo. 1. c. 147.]

Nothing appearing on the face of the petition to disclose the fraud on which the contract was founded, and the same being susceptible of formal proof without a showing as to its legality, the defense of its legal non-existence was not available under a general denial.

III. The joinder of the general denial, separately stated, with that of the special answer and cross-bill is expressly authorized by statute [Sec. 1807, R. S. 1909; State ex rel. v. Rogers, 79 Mo. 283; Cohn v. Lehman, 93 Mo. 574.]

The special answer and cross-bill alleged with sufficient certainty the grounds of the defense and the reasons for the affirmative relief prayed for. The latter consisted in a prayer for a decree canceling the policy. This changed the action at law into one in equity and the ease should have been heard by the court and not by a jury. [Myers v. Schuchmann, 182 Mo. 159; Wendover v. Baker, 121 Mo. 273.]

For the reasons stated, this case should be reversed and remanded, to he proceeded with as herein indicated.

It is so ordered.

All concur, except Blair J., not sitting.


author: FARIS, J.

text:
    THE STATE ex rel. JAMES WATERWORTH et al. v. CLAUDE L. CLARK, Acting Superintendent of Insurance.
    In Banc,
    June 28, 1918.
    L. STATUTE: Unconstitutional Amendment: Prior Statute Restored. If an existing statute be amended and reenacted, and be by the amendment rendered unconstitutional, the original statute, upon judicial declaration of invalidity of the amended statute, automatically comes into force again.
    2. ’ INSURANCE: Rating Act: Unconstitutional Amendment of 1903: Restoration of Prior Statute. The statute of 1898 declared that no fire insurance policy should contain a clause “requiring the assured to take out or maintain a larger amount of insurance than that covered by such policy” or “making provision for a reduction of the loss or damage by reason of a failure to take out or maintain other insurance.” In 1903 the statute was amended by adding a proviso that the inhibition “shall not apply to policies issued upon personal property in cities which now contain or which may hereafter 'contain one hundred thousand or more inhabitants.” Held, that, if the amendment had the effect to make the general inhibition a local or special law and for that or any other reason rendered the amended statute unconstitutional, the original act automatically came into force again, and if it was a valid enactment the general inhibition thereafter obtained.
    3. -: -: Repeal by Implication of Existing Statute: Inconsistency. There is no inconsistency between the Insurance Rating Act of 1915 and Section 7023, Revised Statutes 1909, and consequently Section 7023 was not repealed by implication by said act. Section 7 of said act does say that a fire insurance company shall not “fix and charge any rate for fire insurance upon property in this State which discriminates unfairly between risks in the application of like charges and credits, or which discriminates unfairly between risks of essentially the same hazards and having substantially the same degree of protection against fire,” and Section 7023 declares that no insurance policy shall contain any clause “requiring the assured to take out or maintain a larger amount of insurance than that covered by such policy” except in cities having one hundred thousand inhabitants or more; but there is a difference in the hazards and the amount of protection in such cities and in other parts of the State, and said Section 7, when the words “charges and credits” are read in the light of the next clause, means that it is only when the hazards and the protection against fire are the same that discrimination in rates is forbidden.
    4.--:-: Class Legislation. Other things being equal classification in legislation on the basis of population is not unconstitutional.
    6. -: -: Filing of Kate With Superintendent: Mandamus. The court refuses to compel, by its writ of mandamus, the Superintendent of Insurance to file, approve and permit the use on all standard policies of fire insurance of what is called the “Reduced Rate Contribution Clause” presented by petitioners, because the statutes do not authorize the same reduction in rates throughout the State.
    Mandamus.
    Writ denied.

      Thomas Bates, Seymour Edgerton and Chas. G. Revelle for relators.
    (1) Sec. 7023, R. S. 1909, is-in direct conflict with and was repealed by the “Rating Act.” Laws 1915, pp. 313-320; State ex rel. v: Public Service Commission, 259 Mo. 704; State ex rel. v. Public Service Commission, 270 Mo. 547; Fidelity Trust Company v. Revelle, 181 S. W. 53. (2) Particularly was that part of said section repealed which prohibits the use of the “Reduced Rate Contribution” or “Coinsurance” clause in cities and towns having a population of less than one hundred thousand inhabitants. Sec. 7, Laws 1915, p. 316; Sec. 9, Laws 1915, p. 316; Sec. 10, Laws 1915, p. 317; Sec. 17a, Laws 1915, p. 319j Sec. 17, Laws 1915, p. 319; State ex rel. v. Geiger, 65 Mo. 306; State ex rel. v. Draper, 47 Mo. 29; Railway Company v. Gas Company, 53 Mo. 17; State ex rel. v. Shields, 230 Mo. 91. (3) Whenever it is necessary in order to give full effect to subsequent laws or to make them conform to the legislative intent, or to make them harmonize with the provisions of the Constitution, words will he modified, changed, and even stricken from a law. State ex rel. Harvey v. Sheehan, 190 S. W. 864; State v. Moody, 202 Mo. 120; Perry. v. Strawbridge, 209 Mo. 64; State ex rel. v. Geiger, 65 Mo. 306. (4) That part of Section 7023 which prohibits the use of the “Reduced Rate Contribution Clause” in cities and towns of less than one hundred thousand inhabitants violates Subdivision 32. of Section 53, Article 4, Constitution, in that it is special and local and relates to a subject on which a general law could have been made applicable. State v. Grhnneman, 132 Mo. 331; State v. Gritzner, 134 Mo. 529; Henderson v. Koenig, 168 Mo. 372. (5). That part of said section which denies to citizens of cities and towns having a population of less than one hundred thousand inhabitants the right to contract for a reduced rate and obtain the advantages of the co-insurance clause also violates Section 1 of Article XIV of the Constitution of the Hnited States in that it denies to persons within the State’s jurisdiction the equal protection of the law and deprives persons of property rights without due process of law. The attempted classification is arbitrary and unwarranted. State v. Loomis, 115 Mó. 307; State ex reí. v. Kimmel, 256 Mo. 637; State ex rel. v. Railroad, 246 Mo. 514.

      Frank W..McAllister, Attorney-General, Thomas J. Cole, and John T. Gose, Assistant Attorneys-General, for respondent.
    (1) Relator’s “Reduced Rate Contribution Clause” is in effect a provision for co-insurance and is condemned by Sec. 7023, R. S. 1909. Alsop Process Co. v. Continental Ins. Co., 175 Mo. App. 317; Attorney-General ex rel. v. Michigan Lubricator Co., 148 Mich. 566; Dahms & Sons Co. v. Ins. Co., 153 Iowa, 168; Farmers Feed Co. v. Ins. Co., 173 N. T. 247; Richard’s Insurance Law (3 Ed.), Sec. 242. (2) Section 7Ü23, Revised Statutes 1909, was not repealed by the Rating Act of 1915. (a) It is not contended that said Section 7023 was directly repealed; (b) And (Section 7023 was not repealed by implication. State ex rel. v. Slover, 134 Mo. 19; State v. Moulton, 262 Mo. 139; State ex rel. v. Wells, 210 Mo. 620; State ex rel. v. Stratton, 136 Mo. 429; Evans v. McFarland, 186 Mo. 723; State ex rel. v. Wilder, 197 Mo. 35; Manker v. Faulhaber, '94 Mo. 1. c. 439; Lewis’s Sutherland on Statutory Construction, p. 461 et seq. (3) The entire proviso attached to Sec. 7023, R. S. 1909, is unconstitutional, because it is in effect special and local legislation arising by the partial repeal of ’a general law. Mo. Constitution, Art. 4, sec. 53, par. 33; Sec. 7023, R. S. 1909; Henderson v. Koenig, 168 Mo. 370; State v. Anslinger, 171 Mo. 612; Anderson v. City of Trenton, 42 N. J. L. 486; Plummer v. Borsheim, 8 N. I). 565; In re Connolly, 17 N. D. 550. (4) The proviso being unconstitutional, Section 7023 will remain in force as it was prior to the unconstitutional amendment. State ex rel. v. Mills, 231 Mo. 498; Eberle v. Michigan, 232 U. S. 700; Lexington v. Lafayette County Bank, 145 Mo. 681; State v. Rich (Maryland), 36 L. R. A. (N. S.) 344; 36 Cyc. 1056. (5) This court should not strike from the proviso the words “in cities which now contain- or which may hereafter contain one hundred thousand inhabitants or more.” To do so would be to exercise the legislative function and make the proviso apply to the entire State, which clearly was not the intention of the legislature. State ex rel. v. Ry. Co., 195 Mo. 250; State ex rel. v. Railroad, 246 Mo. 517; Edmunds v'. Herbrandson, 14 L. R. A. 730. (6) Courts will construe a statute as written, without regard to the results of the construction, or the wisdom of the law as thus construed. State ex rel. v. Wilder, 206 Mo. 549; Belfast Ins. Co. v. Curry, 175 S. W. 205; McCrary v. United States, 195 U. S. 27.
   FARIS, J.

This is an original proceeding by mandamus whereby it is sought to compel respondent, as the Acting Superintendent of Insurance, to file, approve and permit the use on all standard policies of insurance of what is called the “Reduced Rate Contribution Clause.”

The petitioners are the managers of what they denominate the “Missouri Inspection Bureau,” an unincorporated entity, established and maintained under the provisions, it is alleged, of an act entitled “An Act to regulate insurance against loss' or damage by fire, lightning, hail, windstorm and sprinkler leakage, and the rates of premium thereon, and to provide for the making and maintenance of public records in relation thereto, with an emergency clause,” approved March 20, 1915. [Laws 1915, p. 313.]. This act is called in the briefs the “Rating Act,” and we shall for convenience hereinafter refer to it by that name.

The Reduced Rate Contribution Clause, which petitioners by this proceeding seek to compel the Superintendent of Insurance to file and approve for use upon all standard policies, which policies he is required by another statute to approve, reads thus:

“Uniform Standard Missouri
“REDUCED RATE COSTRIBUTION CLAUSE WITH APPLICATION. .......................... hereby request that there be attached to Policy Number ...... of the ........(name of company)...... ............... the following Reduced Rate Contribution Clause, to wit:
“In consideration of the rate at and or form under which this policy is written, it is expressly stipulated and made a condition of this contract, that this company shall be held liable for no greater proportion of any loss than the amount hereby insured bears to ____% of the actual cash value of the property described herein at the time when such loss shall happen; but if the total insurance upon such property exceeds .... % at the time of such loss, then this company shall only be liable for the proportion which the sum hereby insured bears to such total -insurance.
“If this policy be divided into two or more items the foregoing condition shall'.apply to each item separately.
“It is understood by the undersigned that the effect of the above-mentioned Reduced Rate Contribution Clause, when attached, will be to reduce the liability of the insurance, unless the' property described in the policy covered by said insurance is insured for .... % of its actual cash value, except where the loss exceeds the amount of insurance required under this clause.
“............................Assured.
“In compliance with the above application signed by the assured under this policy, made to and on file with this company, the aboved Reduced Rate Contribution Clause is made a part of this policy.
“Attached to and forming part of Policy No......... of the ........ (name of insurance company) ........ issued at its ................................Agency.
“Dated ................. 19....
“..........................Agent.
“This application and clause must be signed by both assured and agent in duplicate and attached to both policy and daily report.”

The issuance of an alternative writ has been waived, and it has been agreed that the petition filed herein should be regarded for all purposes as the alternative writ. To this petition, respondent has interposed a general demurrer, so that the case is before us upon an issue of law.

I. The respective contentions of law arising upon the demurrer, are these: Petitioners concede the application of a statute which was passed in 1893 (Laws 1893, p. 186,), and which was amended in 1903, by appending thereto a proviso in substance to the effect that the prohibition of the section should not he applicable to cities containing 100,000 inhabitants, or more (Laws 1903, p. 209), and which now appears as Section 7023, Revised Statutes 1909, and reads thus:

“No fire insurance policy which may be issued after this section takes effect shall contain any clause or provision requiring the assured to take out or maintain a larger amount of insurance than that covered by such policy, nor in any way providing that the assured shall be liable as coinsurer with the company issuing the policy for any part of the loss or damage which may be occasioned by fire or lighting to the property covered by such policy, nor making provisions for a reduction of such loss or damage, or any part thereof, by reason of the failure of the assured to take out and maintain other insurance upon said property. And all clauses and provisions in fire policies, issued after the taking effect of this section, in contravention of the prohibitions in this section contained, shall be ab initio void and of no effect: Provided, that the provisions of this section shall not apply to policies issued upon personal property in cities which now contain or which may hereafter contain one hundred thousand inhabitants or more whenever the insured sign an agreement endorsed across the face of said policy to be exempt from the provisions thereof. ’ ’

But petitioners contend (a) that the Rating Act has by the clearest implication (aided by' an express repealing section, affecting all inconsistent provisions) repealed Section 7023 supra, and (b) that whether repealed or unrepealed, Section 7023 is unconstitutional. The first point is not unduly stressed in the petition, and if it be made therein at all, it is made by the very vaguest implication. It is, however, most strenuously urged in the brief of the petitioners.

The contention of constitutional invalidity is bottomed upon the effect of the proviso, which was added, as stated above, by amendment- in 1903. There is no attack made upon the section as it stood before the amendment, which amendment permits the attachment of the Rédueed Rate Contribution Clause to a policy on the request of the assured, in all cities containing one hundred thousand inhabitants or more. It is on this point contended that the proviso had the effect to make the theretofore general inhibition against the Reduced Rate Contribution Clause a local and special law, and impaired the obligation of contracts, and that as amended it denied to the inhabitants of the State, other than those residing in cities of one hundred thousand or more inhabitants, the equal protection of the law, and had the effect to take their property without due process of law.

The bare statement of the contention makes it apparent that even if the amendment in 1903 had the effect to render the act unconstitutional, the petitioners are in no wise aided by such invalidity. For it is fairly well-settled that if an existing statute be amended and re-enacted, and be by the amendment rendered unconstitutional, the original statute upon the judicial declaration of invalidity comes automatically into force again. [Lexington v. Lafayette County Bank, 165 Mo. 671; State ex rel. v. Mills, 231 Mo. 1. c. 498; State ex rel. v. Gantt, 274 Mo. 490; Eberle v. Michigan, 232 U.S. 700; State v. Rice, 80 Atl. 1026; 36 Cyc. 1056, and cases cited.] Since, therefore the original statute absolutely forbids and makes void all reduced rate contribution clauses, specifically, and because they were methods of co-insurance (Process Co. v. Continental Insurance Co., 175 Mo. App. 317) without regard to the residence of the assured, petitioners would be in no wise aided by the unconstitutionality of said section, in so far as such invalidity is bottomed upon the fact of amendment. We need not therefore take up space with this contention.

II. But it is said that the Rating Act of 1915 is patently inconsistent with the provisions of Section 7023, and that, therefore, the latter is repealed by Section 17 of the Rating Act, which expressly repealed all inconsistent acts or parts of acts. [Laws 1915, sec. 17, p. 319.]

The rule is well-settled that repeals hy implication are not favored in law. [Gasconade County v. Gordon, 241 Mo. 569.] There is in the Rating' Act an express .repeal, however, of all acts and parts of acts which are inconsistent with the provisions of that act. [Sec. 17, p. 319, Laws 1915.] This leaves open for judicial determination the question -whether there is as between the provisions of the Eating Act and those of Section 7023, supra, any irreconcilable conflict and repugnancy. [Stricklen v. Combe Printing Co., 249 Mo. 614.] If there is, we must needs enforce the section which' repeals all inconsistent provisions, and declare so much of Section 7023 as is in conflict with the provisions of the Eating Act to he no longer in force. Particularly it is contended that Sections 9 and 10 of the Eating Act are in conflict with the provisions of said Section 7023.

In brief, and substantially, Section 7023, supra, provides: (a) That no insurance company shall write any policy which requires the assured thereunder to carry a larger amount of insurance than that covered by such policy : (b) nor any policy requiring the assured to become in effect a co-insurer with the company issuing the policy for any part of the loss or damage which may accrue; (c) nor any policy providing for a reduction of the amount otherwise payable in case of loss, by reason of the failure of the assured to take out and maintain in force other and additional insurance upon the property. The proviso, mentioned above, removes this prohibition as to those persons residing in cities of one hundred thousand inhabitants or more, who may, upon their own written request, make insurance contracts of the forbidden sort.

Section 1 of the Eating Act requires each company engaged in taking risks of the sort named in the title of the act, to maintain a public rating record, from which the premium applicable to every risk in the State may he ascertained. This record is required to show basis rates, with all additions to such rates caused by exposures, or conditions, permits and standards, and the forms and endorsements on which each rate is predicated, as well as the change of rate made on account of the change of form and endorsements. These records are to he kept open to the public, in order that the proposed insurer may readily ascertain in advance the rate to be charged him, and the components of charge and credit which go to make up that rate. [Sec. 1, p. 314, Laws 1915.] Upon the issuance of any policy the assured shall be furnished a schedule, or analysis, which shows the basis rate and the items of charge and credit which enter into and determine the whole rate charged. Section 7, of said Rating Act, forbids any company, or any rating bureau, from fixing any rate which discriminates unfairly between risks by reason of the application of like charges and credits, or., which discriminates unfairly between risks which have substantially the same hazards and the same protection against fire. Section 9, forbids the giving of any rebate by which the discrimination forbidden in Section 7 of the act may be brought about by evasion or subterfuge. Its effect is in all respects similar to that of Section 7 supra. Section 10 provides details by which the forbidden discrimination set out in Section 7 may be prevented. These sections are the only ones pointed out to us by the petitioners wherein the alleged conflict is urged as existing.

A careful reading and. analysis of the Rating Act in the light of these contentions shows that the whole gist and burden of petitioners’ complaint rests upon the forbidden discrimination contained in Section 7. This section is short and fairly plain, and we quote it for convenience and information. In full it reads thus:

“No fire insurance company or other insurer, nor any rating bureau, shall fix and charge any rate for fire insurance upon property in this State which discriminates unfairly between risks in the application of like charges and credits, or which discriminates unfairly between risks of essentially the same hazards and having substantially the same degree of protection against fire.” [Sec. 7, p. 316, Laws 1915.]

If the proviso of said Section 7023, supra, which permits an assured residing in a city of one hundred thousand or more inhabitants to obtain a lower rate of insurance by reason of having attached to his policy the Reduced Rate Contribution Clause, discriminates unfairly between risks of essentially the same hazards, and having substantially the same degree of protection against fire, as against an assured residing in the country, or in a city, town or village having less than one hundred thousand inhabitants, it is obvious that contradiction, contrariety and irreconcilableness inhere sufficient for a repeal of said Section 7023, by implication. If there is no difference in the hazards arid the amount of protection against fire afforded to property situate in a city containing one hundred thousand inhabitants or more, as compared with that in a rural community, or in cities, towns and villages of the .State containing less than one hundred thousand inhabitants, manifestly the point is well taken.

But is there not. a difference, and is not that difference great enough to furnish a reason for the legislative distinction made? We think both of these questions must be affirmatively answered. For it will be seen that Section 7 does not prohibit all'discrimination in rates; it only prohibits such discrimination in cases where the hazards are equal and the same degree of protection against fire is afforded. It is idle to say that the hazards of fire and the protection against the same are equal in St. Louis and Clinton, or in Kansas City and Cape Girardeau, or in St. Joseph and Cedar City. • On first blush, the general provision in said Section 7 of the Rating Act, which forbids unfair discrimination “between risks in the application of like charges and credits,” might seem to require the Reduced Rate Contribution Clause on every policy, if it is to be attached to any; because such a clause is either a charge or a credit (relators in effect say it is the latter) within the purview of Section 1 of the act, which requires all such charges and credits to be rated. But it is fairly clear that the words “charges and credits” simply mean, as the next subsequent clause makes plain, “hazards” of fire and “protection against fire.” No other meaning is possible. Some of these charges are made upon the basis of nearness and nature of exppsures, and some for defective construction, or construction below the standard fixed, of the building insured, or the building containing the insured property. It is plain that these are “hazards,” within the meaning of the last clause of the section. Likewise, the same is true of the “credits.” These depend on the nearness and nature of the fire protection afforded, the distance and kind of exposures, and the nature of the construction above standard. So, all the charges and credits of this section depend wholly on the hazards and protection against fire. Indeed, this is the effect conceded by learned counsel in their exhausive briefs, for they strenuously insist that it was the intent of the Rating Act to give to insurers throughout the State “regardless of where their property may he located, the same rate when the conditions and the risks are the same.”

If these conditions and risks are the same, then the Legislature, having no right to differentiate as between such risks, whether they are in rural districts or in cities of one hundred thousand or more inhabitants, must have intended to repeal Section 7023 supra, when they passed Section 9 of the Rating Act. If there is a difference in the hazards and the fire protection respectively afforded, then it is manifest that there is no inconsistency or repugnancy in' these provisions, and the Legislature did not intend to repeal Section 7023. [State v. Moulton, 262 Mo. 137; State ex rel. v. Wells, 210 Mo. 1. c. 620; State ex rel. v. Wilder, 197 Mo. 27; I Lewis’s Sutherland on Stat. Con., sec. 256.] The rule upon both phases of this proposition is well stated in the excellent work of Mr. Lewis, thus:

“Affirmative statutes which contain no reference to existing statutes, either to amend or repeal them, import that the law-maker has rlo conscious purpose to affect them, unless by congruous addition. On the other hand, when there is inserted in a statute a provision declaring a repeal of all inconsistent acts and parts of acts, there is an assumption that the new rule to some extent is repugnant to some law enacted before. There is a repeal to the- extent of any repugnancy in either case, but no farther. The insertion, therefore, of such a general repealing clause adds nothing to the repealing effect of the act.”

Other things being equal we have long accorded to the Legislature the privilege of classification in legislation upon the basis of population.- [State ex inf. v. Southern, 265 Mo. 1. c. 286; State ex inf. v. Tobacco Co., 177 Mo. 1; State ex rel. v. County Court, 128 Mo. 1. c. 442; State ex rel. v. Bell, 119 Mo. 70; State ex rel. v. Roach, 258 Mo. 1. c. 561; State ex rel. v. Miller, 100 Mo. 1. c. 447.]

Upon this consideration in the last analysis the whole case as presented turns. We are constrained to say that since the Legislature had the authority to make the population distinction which occurs and which justifies the classification, we cannot say that there exists any sufficient repugnancy and inconsistency, as to work a repeal of Sectioft 7023, by that implication, arising from the express repeal of inconsistent acts and parts thereof.

Other questions raised by respondent, viz., (a) that the proviso appended to Section 7023 is itself unconstitutional, and (vaguely) (b) that since the exercise of the authority to approve a form of standard fire or lightning insurance contract is one which under the statute (Sec. 7030, R. S. 1909) rests in the sound discretion of the Superintendent of Insurance, that discretion, so far as it is bottomed on policy, cannot be interfered with by mandamus, not being necessary to a decision, have not been considered. Neither have we considered the effect upon relators’ position of the holding in Nalley v. Home Insurance Co., 250 Mo. 452, touching the constitutional validity of said Section 7030, Revised Statutes 1909. We have considered the case as it was presented to us.

It follows that the demurrer of respondent herein should be sustained, and the peremptory writ denied, and it is so ordered.

All concur.


author: BOND, C. J.

text:
    THE STATE ex rel. WATTS ENGINEERING COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION.
    In Banc,
    June 28, 1918.
    PUBLIC UTILITY: Reduction of Rates: Suspension During Appeal: Money Earned Belongs to Company. Where the Public Service Commission, in order to test the reasonableness of rates charged by a gas company, ordered it to reduce its rates to specified máximums for a period of three years, and retained jurisdiction in order that a proper final order might be made after the test was tried out, and on appeal by the company to the circuit court the order was affirmed, but the court, pending an appeal to the Supreme Court, suspended the order and impounded the excess in rates over those fixed by the Commission, and its judgment was affirmed by the Supreme Court, the gas company is entitled to the excess collected during the time the appeal was pending in the Supreme Court; for, the order having been suspended, the company was lawfully entitled to adhere to its former rates until the judgment of affirmance was rendered.
    Appeal from Cole Circuit Court. — Hon. J. G. Slate, Judge.
    Reversed and remanded (with directions).

      J. L. Hornsby for appellant; W. M. Fitch of counsel.
    (1) The entire sum of $8481.28 and interest earned thereon was ordered impounded hy the circuit court without authority of law, and the whole of said sum is due the appellant, and should be paid to it. (2) Even if the gas consumers who originally paid this fund to appellant had any interest in the fund, the fund should not be distributed until after the Public Service Commission has made a final order fixing reasonable rates to be charged by appellant.

      Alex Z. 'Patterson, General Counsel, and' James D. Lindsay, Assistant Counsel, for respondent, Public Service Commission.
    (1) The right of having a supersedeas or suspension of the order is not a constitutional right, but is purely statutory, and extends no farther than the clear limits of statutes creating it. Sections 112 and 114, Public Service Act; State Public Utilities' Commission v. Chicago & W. T. Ed. Co., 275 111. 555, P. U. E. 1917B, 1. e. 1059. (2) The statutes allowing a suspension make no distinction between an order declared to be in the nature of a “test” order, and one made without expressed conditions or reservations. Sections 112 and 114, Public Service Commission Act. (3) The difference between an order without reservation fixing rates and what is termed a “test” order, is not a difference in kind, but is a difference in degree of conclusiveness expressed, as to the permanence, and reasonable character of the rates fixed. Under the Public Service Act and in the inherent nature of the subject itself, all rate orders are more or less empirical. Sec. tions 20 and 82, Public Service Commission Act. And this applies to all commissions and rate-making processes. (4) The attitude of courts in respect of tests in' eases where the rates of the company have been lowered, is not that the company shall be permitted to charge the former rates, but that it must, unless the new rates appear to be confiscatory, submit to the new rates, with the right and opportunity, within a reasonable and proper time, to make application for a raise or readjustment of rates, or, if the suit be for injunctive relief, renew its application for an injunction. Darnell v. Edwards, 244 U. S. 564; Wilcox v. Consolidated Gas Company, 212 U. S. 1; Knoxville v. Knoxville Water Company, 212 U. S. 19; Missouri v. C., B. & Q. Eailroad, 241 U. S. 533. (5) The appellant was entitled to, and was allowed a suspension of the order only until “the final decision of the case” (the case in court), and could not he more entitled to resceive or retain the excess collected by-it before such final decision, than after such final decision. Sections 112 and 314 and eases cited above. (6) The test or requirement made upon appellant by the Commission was a reasonable and valid one. State ex rel. Watts Eng. Co. v. Pub. Serv. Coni., 269 Mo. 525. Being so, appellant was bound to undergo the test, and to comply with the requirement made, upon the terms of the requirement, and at the expense of appellant, and not at the cost of the consumers. All cases cited above.
   BOND, C. J.

I. Upon complaint of the City of Columbia, the Public Service Commission made an order requiring the owner of the local gas works to make a lower schedule of prices for the sale ^ gas_ jn that city, specifying in the order the maximum rates that should thereafter be charged for three years from March 1, 1915. The Public Service Commission, for the purpose of future modifications, dependent upon the result of this test, retained full jurisdiction of the cause.

The grounds of the provisional order and the evidence upon which it was based are recited in the opinion of this court (269 Mo. 525) upon the appeal from the judgihent of the circuit court of Cole County affirming the order of the Commission.

While the case was under review in the circuit court of Cole County an order was made by that court suspending the effectiveness of the provisional order of the Public Service Commission and impounding the excess of collections for rates of gas over the rates specified in the order of the Commission during the pendency of the review of such order in the lower court and during the pendency of an appeal to this court.

Upon the filing of the mandate and decisions in this court in the circuit court of Cole County, . on March 10, 1917, the owner of th»e gas company, as relator, moved the circuit court to make an order directing Uhe repayment to it of the excess collections, amounting, on February 1, 1917, to tbe sum of $8481. 28, and which, under the orders of the circuit court, had been placed in the Central Missouri Trust Company of Jefferson City, Missouri. *

The circuit court denied the application of the relator and rendered judgment for the distribution of the aforesaid sum. From that judgment the relator prefected an appeal to this court.

II. The statute (Public Service Commission Law, sec. 112) provides that “in case the order or decision of the Commission is stayed or suspended” such stay or suspension “shall not become effective” until the giving of a statutory ^

The statute further provides that upon an appeal from a judgment of the circuit court rendered in a proceeding to review the order of the Commission, “the circuit court may, in its discretion, suspend its judgment pending the hearing in the Supreme Court on appeal, upon the filing of a bond,” etc. [Pub. Serv. Law, sec. 114.]

In the instant case the suspension orders contemplated by these sections of the statute were duly made in the trial court. The question, therefore, is to whom does the money collected in the interim of the final decision of this court, affirming the right of the Commission to make a test order, belong? In determining this it is well to note the exact points ruled on the former appeal in this case. In stating the question then presented, this court said:

“If the order made in this case had been one permanent in character the question presented would be entirely different. But such is not the nature of the order made by the Public Service Commission. Our function is to determine the reasonableness of the order as we find it. The present order is one made for the purpose of making a test, to the end that the real question of a reasonable rate may be ultimately determined.” [State ex rel. v. Public Service Com., 269 Mo. 1. c. 535.]

In the further discussion of the question of the reasonableness of an order of the peculiar nature of the one then under review, the opinion supra grounded its conclusion of the reasonableness of the test order upon the observation that the evidence tended to show “that a reduction in rates would increase the sales or consumption,” adding, “this can only be determined by actual test. Such was the course pursued by the Public Service Commission,” by the order made in this case and it is this “test order” that was then held in judgment. [269 Mo. 1. c. 535.]

This court thereupon proceeded to affirm the judgment of the circuit court sustaining the order of the Commission and closed its opinion with these words: “If after the test, the rate is found to be too low, the matter can be corrected by the Public Service Commission.” [L. c. 539.]

The above adjudication of the nature and purposes of the order of the Commission became the subsequent law of this case.

We, therefore, assume (as is stated in appellant’s brief) that it at once obeyed the order of the Commission and lowered its rates in conformity, and that it has thereafter charged only, for the supply and service of gas, the rates tentatively fixed by the Commission, and that the permanency of such rates is a question for the determination of the Commission on facts which shall be developed by the application of the trial rates fixed in its experimental order. It is evident, however, that until the time of putting the trial rates into operation, there was and could have been no test or trial at all, for until they became effective all consumers paid the old rates in vogue before the order of the Commission. It is equally obvious that until the application of the test rates, none of the results contemplated by that experiment could become known to the Commission, which had reserved jurisdiction for the very purpose of ascertaining (through the results of a test) whether the lowering of the prices would so increase the consumption and profits as to provide the sum or percentage of earnings which the Commission held the utility was entitled to earn.

It is an obvious corollary that the difference between the former rates and those specified in the test order (being the amount which has been impounded during the litigation) cannot belong to any other person than the owner of the utility, who was lawfully entitled to adhere to its former rates, under the suspension orders of the circuit court, until the final judgment of this court directing it to put into effect the trial test prescribed by the Commission. The circuit court, therefore, erred in directing this amount to be distributed to any other person than the owner of the gas plant.

The judgment of the circuit court of Cole County is reversed and the cause remanded with directions to ascertain what portion of the amount of the collections was received pending the finality of the judgment of this'court on the former appeal, and to order so much thereof to be paid over to the appellant. It is so ordered. All concur.