Plaintiff and Respondent, v. CITY OF UPLAND (1967)

OPINION

City of Upland appeals from judgments entered in the Superior Court in and for the County of San Bernardino in the consolidated trial and appeal of the above-named causes, granting a permanent injunction enjoining the City from any further proceeding in any manner to conduct a referendum election previously set for July 13, 1965, which concerned the submission to the voters of the granting of a franchise by the City Council of the appellant to the Atchison, Topeka & Santa Fe Railroad for the benefit of respondent Pacific Rock & Gravel Company.

The primary question in both appeals is whether the granting of a franchise for a spur track by a general law city to the railroad, a public utility, is an administrative or legislative act under the laws of this state.   It is conceded that if the act of the governing body of the City is an administrative one, it is not subject to referendum, whereas, if the act is a legislative act, it is subject to referendum.

Plaintiffs seek a decision that the act of the governing body was an administrative one.   Defendants propose the opposite conclusion.   The trial court found the act to be administrative in character.

It is uncontested that the Atchison, Topeka & Santa Fe Railroad is a public utility subject to control and regulation by the Public Utilities Commission, State of California (Article 12, section 23, Constitution, State of California as provided by the Legislature.   The same article and section of the California Constitution provides in part:

“The Railroad Commission shall have and exercise such power and jurisdiction to supervise and regulate public utilities, in the State of California, and to fix the rates to be charged for commodities furnished, or services rendered by public utilities as shall be conferred upon it by the Legislature, and the right of the Legislature to confer powers upon the Railroad Commission respecting public utilities is hereby declared to be plenary and to be unlimited by any provision of this Constitution.   From and after the passage by the Legislature of laws conferring powers upon the Railroad Commission respecting public utilities, all powers respecting such public utilities vested in boards of supervisors, or municipal councils, or other governing bodies of the several counties, cities and counties, cities and towns, in this State, or in any commission created by law and existing at the time of the passage of such laws, shall cease so far as such powers shall conflict with the powers so conferred upon the Railroad Commission;  * * *.”

 The former language of this constitutional section and article, originally enacted in 1879, was stricken;  the new section and article were enacted in 1911 but amended to the present language in 1914.   The Legislature enacted the Public Utilities Act of 1912 and reenacted it in 1915 after the 1914 constitutional amendment to section 23 became effective.   Appellant, as a general law city, possesses no powers which are not subject to and controlled by general laws and does not enjoy “vested” powers within the meaning of section 23 as originally adopted in 1911 and amended in 1914.   (City of SaN Mateo v. Railroad Commission, 9 Cal.2d 1, 7, 68 P.2d 713.)   Later and in 1951 the Public Utilities Act with various related statutes was codified as part of the Public Utilities Code.   We are not here concerned that the Public Utilities Code does not contain all of the legislative acts relating to the Public Utilities Commission's (formerly Railroad Commission) authority to power, for that Code contains provisions applicable to the case here on review.

By the provisions of Article 12, section 22, the Legislature has constitutionally provided power to confer upon the Public Utilities Commission additional powers of the same kind or different from those conferred which are not inconsistent with the powers conferred by the Constitution.   Such legislative authority to confer additional powers is conferred by the Constitution.   Such legislative authority to confer additional powers is constitutionally “declared to be plenary and unlimited by any provision of this Constitution.”

The learned trial judge prepared and filed a well-reasoned Memorandum in substantiation and support of his conclusion that the act of the governing body in granting the franchise was administrative in character, consequently, foreclosing the right to a referendum.   We quote with approval from that Memorandum:

“Section 7555, Public Utilities Code, provides that upon application to the governing body of a city for a franchise to cross a city street with trackage such body shall (a) hold public hearing and (b) shall thereafter grant the franchise unless (c) it reasonably finds such grant to be detrimental to the public interest of the city provided (d) such grant shall be by two-thirds of the governing body.   The predecessor section to Public Utilities Code 7555 was Section 470 of the Civil Code.   Prior to 1945 that section provided that the city authority ‘from which the right must emanate’ could grant the ‘right to use’ streets for railroad purposes upon two-thirds vote of the city authority.   No limitation was then imposed by the statute upon this power to grant or deny the right of use.   In 1945 the section was amended, retaining the phrase that the city authority was the source ‘from which the right must emanate,’ but now including the mandatory provisions for public hearings and grant of franchise unless detrimental to the public interest.   Its final amendment, in the form in which it now appears as Section 7555, Public Utilities Code, was accomplished in 1951.”

Although not stated in the Memorandum, for clarity of reading, we add that section 14, Public Utilities Code, provides:  “ ‘Shall’ is mandatory and ‘may’ is permissive.”

“By the 1914 Amendment to Article 12, Section 23, of the California Constitution, the powers of local control of public utilities retained by vote of the local electors were taken away, except for local police, sanitary and other regulations.   The Constitution then provided that all such powers (with certain exceptions not applicable here) were vested in the Railroad Commission, which subsequently became the Public Utilities Commission.   This reservation of the right of the state to ‘confer powers upon the Railroad Commission respecting public utilities' was declared ‘to be plenary and to be unlimited by any provision of this Constitution.’  “Thus it appears clear that the power to control and regulate railroads is reserved to the state.   That power expressly includes construction, maintenance, use and protection of street and railway crossings (Public Utilities Code 1201, 1202) and the legislature has recognized ‘that the authority and jurisdiction thus vested in the Commission involve matters of statewide importance and concern.’   Such power is of course separate and distinct from the power of a municipality to grant franchises.   Such municipal action does not impose any obligation upon the Commission to approve the crossing, although by its regulations the Commission requires certified copy of the franchise to be attached to the application for consent to construct such crossing.  (Cal.Adm.Code, Title 20, Sec. 32).

“The legislature may delegate to municipalities power to authorize or consent to railroads over their streets, and such power may be exclusive, but a franchise remains a grant of the state, although given through the medium of the city, since the city exercises delegated power of the state, and acts on its behalf.  (44 Am.Jur. 302.)  [Undoubtedly, the reference is 44 Am.Jur., Railroads, Section 302.]

“

“The Court concludes that legislative power concerning railroads, excepting police and sanitary regulations, is reserved to the state to the exclusion of local bodies politic;  that the delegation of power to grant a permit, franchise, or right of use over city streets (in accord with Public Utilities Code 7555) is an implementation of the state's legislative policy;  that the right of approval, consent, or franchise by the municipality is primarily an administrative decision based upon a determination of facts;  that such action is not legislative in character;  and that the right of referendum does not exist to reconsider the action of the Council.”

In support of the conclusion reached by the trial judge, the cited law requires and compels the local governing body to grant the franchise unless that body finds such grant of franchise to be detrimental to the public interest.   To legalize the grant, if no such detriment is found, there must be a two-thirds vote of the membership of that body.   On this appeal the record does not disclose such finding of detriment.   There is no issue that the vote was other than required by law.

Defendants would have us hold that any grant of a franchise by a general law city is a legislative act under the authority of Monarch Cablevision, Inc. v. City Council of the City of Pacific Grove, 239 Cal.App.2d 206, 210, 48 Cal.Rptr. 550, and cases therein cited, Fall v. County of Sutter, 21 Cal. 237;  Truckee and Tahoe etc. Road Co. v. Campbell, 44 Cal. 89;  People ex rel. Dean v. Contra Costa County, 122 Cal. 421, 55 P. 131.   For good cogent reasons, we cannot yield to defendants' insistence.  Monarch, supra, did not involve a public utility regulated by the Public Utilities Commission nor were the Constitutional and Public Utilities Code provisions cited herein applicable to the factual situation before that appellate court.

The conclusions in Fall, Truckee and Contra Costa, supra, cases were all reached prior to the constitutional and statutory provisions which control the power of a general law city to grant such a franchise on behalf of the legislature.   The decisions of these cases are not controlling.   Since the cases were decided before the law now applicable, the doctrine of stare decisis has no application to compel a different conclusion herein from that reached by the trial court.   The other and innumerable cases cited to us by defendants fall within two classifications, (1) they were decided before the enactment of the constitutional and statutory law herein involved or (2) although decided after the enactments, dealt with freehold charter cities not controlled by the present law.

 We are not here deciding that any and all grants of franchises by governing bodies of general law cities are administrative acts.   We are deciding that the particular franchise granted by the defendant City is governed by the particular constitutional and statutory law cited herein and the act of defendant City was an administrative one.

Judgments affirmed.

McCABE, Presiding Justice.

KERRIGAN and TAMURA, JJ., concur.