Plaintiff is a New York State corporation doing an intrastate business in the production and sale of electric power. After hearings and other appropriate proceedings before it, defendant Public Service Commission made and promulgated its order fixing permanent rates to be charged by plaintiff. Plaintiff thereupon brought the present suit in equity to enjoin the enforcement of the order. The complaint herein asserts that the rates so established by defendant commission are so low as to be confiscatory *Page 385 of plaintiff's property and thus unlawful under the Fourteenth Amendment to the United States Constitution and section 6 of article I of the Constitution of this State. The commission moved to dismiss the action on the ground that plaintiff's only recourse to the courts is by way of a petition for an order of certiorari under article 78 of the Civil Practice Act, and that no suit in equity lies to contest commission-fixed rates. Plaintiff's retort is that, while certiorari is available, it is not a constitutionally adequate remedy. In certiorari proceedings, plaintiff points out, there would be no new trial and findings by the court on the disputed questions of fact as to value, etc., but only a review by the court of the commission's findings, to see if they were reasonable and supported by substantial evidence (People ex rel. N.Y. Queens Gas Co. v.McCall, 219 N.Y. 84, 90, 91; People ex rel. Consol. Water Co. v. Maltbie, 275 N.Y. 357, 370: Matter of Stork Restaurant,Inc., v. Boland, 282 N.Y. 256; Matter of Miller v. Kling,291 N.Y. 65). Citing Ohio Valley Water Co. v. Ben AvonBorough (253 U.S. 287), for authority, plaintiff has successfully maintained herein that, having adequately alleged unconstitutional confiscation of its property, its absolute right to procedural due process can be satisfied by nothing less than a separate, independent trial de novo by a court, of the same questions already litigated at length before the commission. If that be the law, a good many long, involved rate cases will have to have two trials each, and the first trial — before the commission — will be rather a footless and futile performance. As the dissenting opinion in the Appellate Division remarked: "Something rather extraordinary is required to justify a procedure so protracted and cumbersome." (270 App. Div. 55, 65.) "State regulation of utility rates" would be, says Corwin's The Constitution and What It Means Today, "rendered largely farcical by the idea that the courts ought to retry from the ground up administrative findings of fact" (9th ed., p. 171).
Let us at once dispose of the idea that the present decision merely gives plaintiff its choice between two established modes of attacking, in the courts, commission-fixed rates. At a later point in this opinion we will deal more extensively with the historical background of rate review in New York, but we *Page 386 point out now that the decision below in this case was the first in any appellate court in this State allowing a public utility corporation to try out anew, in a separate suit, the factual questions, as to value, return, etc., already submitted to, and determined by, the commission to which the Legislature has delegated sole authority in that field. Such cases as MunicipalGas Co. v. Comm. (225 N.Y. 89) have to do with rates directly fixed by the Legislature itself, to which certiorari review is inapplicable.
If it were not for the Ben Avon case (supra) and the structure of argument built thereon, we could dispose of plaintiff's suit summarily, for it is settled in the decisions of this court that no such bill in equity lies. Certiorari is the remedy provided for reviewing the Public Service Commission's rate orders (People ex rel. Central Park North East River R.R.Co. v. Willcox, 194 N.Y. 383). In such a certiorari proceeding there is no second trial of the facts but an examination of the legality of the order — that is, an inquiry by the court as to whether the order is arbitrary or capricious or without support of substantial evidence (People ex rel. New York Queens GasCo. v. McCall, supra). In other words, it is the same sort of review afforded by our courts as to determinations by other administrative agencies (Matter of Miller v. Kling, supra). The contention that a rate is confiscatory is, like every other question of law, fully litigable in such proceedings (People exrel. New York Queens Gas Co. v. McCall, supra). Such was the New York law before the Ben Avon case, and this court saw nothing in the Ben Avon case to compel a change in the rule (People ex rel. Consol. Water Co. v. Maltbie, supra). In both the New York Queens case and the Consolidated Water case (supra), there were claims of confiscation, but in each instance this court held that certiorari was a sufficient remedy. Both those cases went thereafter to the Supreme Court (245 U.S. 345 and 303 U.S. 158) but the point we are here passing on was not decided by that tribunal, in either case. Both were certiorari cases and in neither did this court say in so many words that an equity suit might not have been brought to establish that the rates were confiscatory. But that was the plain meaning of Judge LEHMAN'S language in the ConsolidatedWater case, at page 370 of 275 New York: "It is true that a determination by *Page 387 a legislative or administrative body on a question of fact is not binding upon a court where the power of the legislative or administrative body is challenged. (Cf. Ohio Valley Water Co. v. Ben Avon Borough, 253 U.S. 287; Crowell v. Benson,285 U.S. 22; St. Joseph Stock Yards Co. v. United States,298 U.S. 38.) Even so, where the State gives to an administrative body power to determine questions of fact by judicial inquiry subject to review in the courts, no Federal rights are denied by its order unless `there was such a want of hearing or such arbitrary or capricious action on the part of the Commission as to violate the due process clause of the Constitution.' Except in the form of judicial review the courts do not examine the question whether the evidence preponderates for or against a conclusion. (People ex rel. New York Queens Gas Co. v.McCall, supra, 245 U.S. at p. 348.)" That language means that the New York method of court scrutiny of rate orders is by certiorari proceedings and that the scope of our certiorari review adequately meets Federal constitutional requirements, including the requirements of the Ben Avon case. It is impossible to read it as meaning anything different.
Standing on those prior decisions of ours, we could stop at this point and vote for a dismissal of the present suit. But the prominence given the Ben Avon case (supra) in the briefs here, and a desire to pay due attention to the decisions of the Supreme Court, prompts some further discussion. The Ben Avon opinion does say that, in rate cases "if the owner claims confiscation of his property will result, the State must provide a fair opportunity for submitting that issue to a judicial tribunal for determination upon its own independent judgment as to both law and facts; otherwise the order is void because in conflict with the due process clause, Fourteenth Amendment" (253 U.S. at p. 289). On its face, in its setting and against its particular factual background, that quoted language does seem to mandate a full new trial in the courts of facts disputed before the commission, and it has been frequently cited by judges and commentators as meaning just that. Whether or not it has been (implicitly but not explicitly) overruled by later cases in the same court (see Railroad Commission v. Oil Co., 310 U.S. 573,311 U.S. 570; Power Comm. v. Pipeline Co., 315 U.S. 575, andPower Comm. v. Hope Gas Co., *Page 388 320 U.S. 591), we need not say. However, the so-called "Ben Avon rule" has been, to put it most mildly, weakened by those more recent decisions of the same court (see, as to the "vitality" of the Ben Avon doctrine, 42 Am. Jur., Public Administrative Law, § 222). For instance, in Railroad Commission v. Oil Co. (supra), the Texas Railroad Commission had, pursuant to a Texas statute, set the amount of crude oil permitted to be produced daily from an oil field and had prorated that production among the wells in that field. The oil company brought suit in the Federal courts, asserting that the proration resulted in an unconstitutional taking of its property rights in its own wells. The Federal District Court conducted a trial de novo, at the conclusion of which it held that the commission's order did result in such confiscation, and granted an injunction. The Circuit Court affirmed the decree. The United States Supreme Court reversed, disregarded the new findings and went back to the Railroad Commission's findings, with these comments: "Nothing in the Constitution warrants a rejection of these expert conclusions. Nor, on the basis of intrinsic skills and equipment, are the federal courts qualified to set their independent judgment on such matters against that of the chosen state authorities. For its own good reasons Texas vested authority over these difficult and delicate problems in its Railroad Commission. Presumably that body, as the permanent representative of the state's regulatory relation to the oil industry equipped to deal with its ever-changing aspects, possesses an insight and aptitude which can hardly be matched by judges who are called upon to intervene at fitful intervals. Indeed, we are asked to sustain the district court's decree as though it derived from an ordinary litigation that had its origin in that court, and as though Texas had not an expert Commission which already had canvassed and determined the very issues on which the court formed its own judgment. For it appears that the court below nullified the Commission's action without even having the record of the Commission before it. When we consider the limiting conditions of litigation — the adaptability of the judicial process only to issues definitely circumscribed and susceptible of being judged by the techniques and criteria within the special competence of lawyers — *Page 389 it is clear that the Due Process Clause does not require the feel of the expert to be supplanted by an independent view of judges on the conflicting testimony and prophesies and impressions of expert witnesses." (311 U.S. 570, 575-576.) The statement just quoted is fundamentally at variance with the holding now being made by this court in the present case: that the Federal Constitution requires that whenever a utility corporation alleges that a rate is confiscatory, the corporation is entitled to bring an equity suit and demand new, independent findings by the court as to whether or not the rate is reasonable and fair. And how are we to reconcile with the majority opinion in the present case the Supreme Court holdings, in Power Comm. v. Pipeline Co. (supra) and Power Comm. v. Hope Gas Co. (supra) that a commission is not bound to the use of any single formula or combination of formulae in determining rates, that whenever a commission rate order is challenged in the courts the question is whether that order viewed in its entirety meets legal requirements, that the result reached, not the method employed, is controlling as to the legality of the rate, that it is not the theory but the impact of the rate order which counts, and, finally, that, if the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry is at an end?
This court, itself, after the Ben Avon decision, again tested our certiorari procedures by that case's rules and found that they stood the test (Consolidated Water case, supra). This court thought then that due process does not require that any fact be tried out twice in separate tribunals before a binding result be reached. The property owner who charges confiscation is given a court determination of that issue, but the issue is decided by the court on the reasonable factual holdings made by another competent tribunal, as to values and other items basic to rate making. That special tribunal created and equipped by the Legislature for the special task has already investigated the facts and arrived at an appropriate rate. All of that is then examined by a court to see if the owner's rights are being violated. A brief look at the development of the law of rate making will show, we think, why the courts of New York hold that this system lacks no element of due process. *Page 390
No State, under the guise of regulating fares and tariffs, may require a utility company to perform its services without appropriate reward (Railroad Commission Cases, 116 U.S. 307,331). Accordingly, the rates charged by the owners of private property devoted to public utility uses may be regulated by the States in the exercise of their police power, but a State cannot take away an owner's right to reasonable compensation for such use (Munn v. Illinois, 94 U.S. 113). It follows that any prescription, by a State, of rates too low for just compensation to the public utility corporation is confiscatory and offends against the Fourteenth Amendment's requirement of due process (Smyth v. Ames, 169 U.S. 466, 526). Likewise violative of the due process mandate would be a State statute which would attempt to give finality and conclusiveness to rates fixed by a State public service commission without provision for any judicial inquiry as to their reasonableness (Chicago, Milwaukee St.Paul Ry. Co. v. Minnesota, 134 U.S. 418, 458). An avenue of judicial approach there must be. Rate making by a State government is, of course, legislative, not judicial, in general character (Prentis v. Atlantic Coast Line, 211 U.S. 210, 226;Matter of Helfrick v. Dahlstrom Metallic Door Co., 256 N.Y. 199,207), since it is an exercise of the police power (BuffaloEast Side R.R. Co. v. Buffalo Street R.R. Co., 111 N.Y. 132) and its regulations are to be applied in the future (NorwegianNitrogen v. United States, 288 U.S. 294, 318, 319). But while the setting of rates is legislative, the determination of whether or not a particular rate works out to an illegal forfeiture of private property, is a judicial inquiry (see People ex rel.Schau v. McWilliams, 185 N.Y. 92, 95, 96). From all of that there follows the rule of constitutional interpretation that adequate judicial procedures for such inquiries must be made available by the rate-fixing State (Chicago, Milwaukee St.Paul Ry. Co. v. Minnesota, supra; Smyth v. Ames, supra). This procedural due process, however, does not call for any particular mode of court activity. The right to due process does not give a citizen a vested right to any one form of procedure. It is enough that he be afforded access to the courts for protection of his property (Truax v. Corrigan, 257 U.S. 312,332; Hurtado v. California, 110 U.S. 516, 536). Due process, as applied to a judicial inquiry, means a course of legal proceedings according *Page 391 to established rules and procedures for protecting and enforcing private rights (Pennoyer v. Neff, 95 U.S. 714, 733; Scott v. McNeal, 154 U.S. 34, 46). It means the following of forms of law appropriate to the case and just to the parties (Hagar v.Reclamation District No. 108, 111 U.S. 701, 708). "The due process clause of the Fourteenth Amendment requires that action by a state through any of its agencies must be consistent with the fundamental principles of liberty and justice which lie at the base of our civil and political institutions, which not infrequently are designated as `the law of the land.'" (Buchalter v. New York, 319 U.S. 427, 429.) In the end, it connotes procedure "having the sanction of settled usage" (People v. Adirondack Railway Co., 160 N.Y. 225, 236, affd.176 U.S. 335). As Lord COKE put it, it means being brought in to answer "according to the `old law of the land'" (Westervelt v.Gregg, 12 N.Y. 202, 212). The courts must furnish protection "against all mere acts of power, whether flowing from the legislative or executive branches of the government" (Westervelt v. Gregg, supra, p. 212), by offering the citizen a "forensic" judgment on his complaint, not "mere legislation" (Taylor v. Porter, 4 Hill 140, 146, 147).
By affirming the orders below in the present suit, we are holding that our customary certiorari proceedings under article 78 of the Civil Practice Act somehow fail to meet the tests outlined above. Wherein are they deficient? The ultimate determination of the validity of commission-established utility rates is now, as it always has been, in the courts. In this State certiorari as a traditional and accepted method of reviewing the action of inferior bodies or officers is older than the Fourteenth Amendment, and older than the State itself (People exrel. Republican Journal Co. v. Lazansky, 208 N.Y. 435, 441). In our State the whole judicial power is not committed to the courts in the first instance (People ex rel. Steward v.Railroad Comrs., 160 N.Y. 202, 207) but the courts have always been empowered to re-examine the judicial or quasi-judicial action of other bodies by way of certiorari (Mooers v.Smedley, 6 Johns. Ch. 28; People ex rel. Hanford v. Thayer, 88 Hun 136; Hyatt v. Bates, 40 N.Y. 164, 166). For over a century the New York courts have found it sufficient to review such actions as to their *Page 392 legality, including a search of the record in each case to see if there be any evidence supporting the determination below, but without a retrial of fairly disputed questions of fact (Peopleex rel. Bodine v. Goodwin, 5 N.Y. 568; People ex rel. Cook v. Board of Police, 39 N.Y. 506; People ex rel. Burby v.Common Council, 85 Hun 601; People ex rel. Haines v. Smith,45 N.Y. 772, and see section 2140 of the old Code of Civil Procedure, enacted in 1880, and former section 1304 of the Civil Practice Act, the latter now superseded by present section 1296 of the Civil Practice Act). As Judge CUDDEBACK pointed out inPeople ex rel. New York Queens Gas Co. v. McCall (supra), that limited judicial review avoids substituting the judgment of judges for that of other officers in matters of fact, but does include an inquiry into questions of jurisdiction, authority and similar questions of law. In other words, the courts do not interfere with the commission's business any further than is necessary to keep the commission within the law and protect the property rights of the utility corporations. This court's opinion in the New York Queens case (supra) points out (219 N.Y. at pp. 88, 90) that our certiorari method of scrutinizing commission-made rates is in seeming accord with InterstateCommerce Comm. v. Illinois Central R.R. Co. (215 U.S. 452) andState v. Great Northern Ry. Co. (130 Minn. 57). In the GreatNorthern case, the Minnesota court remarked that any general denovo trial by a court of a rate question would amount to an unconstitutional assumption by that court of an essentially legislative function.
To bring our list of New York decisions down to date, we point to Matter of Rumsey (296 N.Y. 113), decided in January of this year. The Rumsey Corporation was ordered by the State Labor Department authorities to pay penalties totaling $1,000 for delays in filing its payroll statements. The corporation insisted that all the evidence taken at the departmental hearings proved that it had been absolutely impossible to get the reports in on time. Section 623 of the State Labor Law provides that "A decision of the appeal board shall be final on all questions of fact * * *." It was argued to us that the statute, insofar as it forbade the courts to weigh the fact issues as to confiscation of property by means of an unwarranted fine, was unconstitutional (see Point III, respondent's *Page 393 brief in this court, in the Rumsey case). We found "no substance" in that contention (296 N.Y. at p. 118).
In Coler v. Corn Exchange Bank (250 N.Y. 136) Chief Judge CARDOZO, stating this court's approval on a long-established method of seizing property, wrote: "Not lightly vacated is the verdict of quiescent years" (p. 141). He there cited Ownbey v.Morgan (256 U.S. 94, 108, 111) which tells us that one good way of testing court procedures for due process is to see whether they are familiar and time-honored. The Fourteenth Amendment itself expresses an insistence that the States perpetuate old and settled ideas of justice. In the Coler case, Chief Judge CARDOZO quoted also from Jackman v. Rosenbaum Co. (260 U.S. 22, 31): "The Fourteenth Amendment, itself a historical product, did not destroy history for the States and substitute mechanical compartments of law all exactly alike. If a thing has been practiced for two hundred years by common consent, it will need a strong case for the Fourteenth Amendment to affect it * * *." The practice in this State for well over a hundred years has been for the courts to perform their proper judicial functions in relation to quasi-judicial bodies by testing the actions of those bodies for reasonableness and legality, without ousting them from their own special fields of investigation. Due process demands no more.
As we understand the majority's position, it is that due process requires a plenary equity suit to try plaintiff's allegation of confiscation, but that no new testimony need be taken, and that the equity court may try the issue on the proof already taken by the commission. It must be clear: first, that plaintiff seeks no such proceeding and does not want new findings on the evidence already heard but demands a real de novo trial, and, second, that, while a new determination on the commission record may satisfy concepts of due process, it finds no authorization or precedent in any procedural statute, rule or decision in this State. After this plenary equity suit has gone to trial and Special Term has weighed for itself the commission testimony, the party aggrieved by the Special Term decision will, we assume, have a right of appeal to the Appellate Division. On such an appeal the weight of the evidence will again be open. That will make three separate, independent weighings, *Page 394 by one commission and two courts, of the identical testimony, each tribunal having exactly the same function and power, but each overruling the one ahead of it. And, if the Appellate Division makes new findings, this court will for a fourth time pass on the weight of evidence. All this is in supposed obedience to instructions from the Supreme Court, which court not only has indicated in at least three recent decisions that no such new trials are necessary but has said in the Schechter case (295 U.S. 495, 530) and elsewhere, that nothing in the United States Constitution prevents Congress from delegating the determination of fact questions to any tribunals it sets up.
The Public Service Commission was set up in this State forty years ago. The commission has been investigating and fixing utility rates ever since. The scope of its work and the number and kind of services regulated by it have been gradually increased by the Legislature. The commission now has several hundred officers and employees and an annual budget of about two million dollars. It regulates about thirty-five hundred separate corporations and has conducted thousands of investigations and hearings, a large percentage of them having a direct or indirect effect on rates. Rate reductions running into vast sums have been ordered and put into effect. Now a way has been found to take away pretty much all finality from the commission's rate-making function. We make no prediction as to the size and force of the impact of this present decision on the whole carefully built and strengthened system of protecting the interests of the people of this State. The decision, it cannot be denied, upsets a workable and working system. It authorizes an additional cumbersome and elaborate method of court review when there is neither practical nor theoretical need therefor. And, based as it is on a construction of the Federal Constitution, our ruling will be beyond the power of the State Legislature to correct.
In Administrative Justice and The Supremacy of Law by Dickinson, published in 1927, this was said as to authorizing the courts to make new findings in these cases: "It is like permitting the court to substitute its conclusion in place of the jury's as to whether the plaintiff in a negligence action did or did not see an approaching vehicle. If the court's `independent' *Page 395 judgment on such a point is to prevail, there would be little use in having a jury. The argument applies with greater force to the finding of a commission, reached in a separate proceeding at much trouble and expense to both the public and the parties. The double process only reduplicates the uncertainty of any particular case and brings it out at the end of the administrative stage of the proceedings with nothing settled which is not liable to be overruled. After the administrative tribunal has spoken, the whole case would still be as open, and the nature of the ultimate decision as uncertain, as if no proceedings had yet been had. Such a hazard is not one which either the community or the utility companies ought fairly to be called upon to bear." (P. 202.)
The order appealed from should be reversed and the complaint dismissed, with costs in all courts. Both certified questions should be answered in the negative.
LEWIS, CONWAY and DYE, JJ., concur with THACHER, J.; DESMOND, J., dissents in opinion in which LOUGHRAN, Ch. J., and FULD, J., concur.
Order affirmed, etc.