US SUPREME COURT DECISIONS

1. By grant of the Executive Council of Puerto Rico, a limited partnership was entitled (among other privileges) to dam the outlet of a lake and use the impounded water in the irrigation of its own land, subject to the condition, imposed to protect private lands, public roads, and the public health from the injurious effects of overflows, that the lake should not be raised above a level prescribed. Held, a grant of quasi-public nature, within the meaning chanrobles.com-red

Page 296 U. S. 507

of provisions of the Organic Acts for Puerto Rico of 1900 and 1917. P. 296 U. S. 514.

2. Every franchise is subject to be revoked by the proper public authority for breach of a condition, express or implied, upon which the grant depended. P. 296 U. S. 515.

3. Revocation of a franchise for breach of condition may be by any procedure not repugnant to established principles of justice, and they are satisfied if the withdrawal of the privilege, declared by executive or legislative authority, may be followed by an appeal to a court of competent jurisdiction in which the rights of the holder may be determined. P. 296 U. S. 515.

4. Reservation in the Organic Acts of power in Congress to annul or modify grants of franchises in Puerto Rico does not imply a withholding of such power from the local authorities. P. 296 U. S. 515.

5. Under the Organic Acts for Puerto Rico and Act No. 70, 1917, of the local legislature, the Public Service Commission was authorized to cancel the franchise, involved in this case, granted by the earlier Executive Council, both under the power to amend, alter, and repeal which was expressly reserved and under the implied power to revoke for breach of condition. P. 296 U. S. 516.

6. A reserved power to repeal a grant of special privileges may be exercised at the pleasure of the legislature or other authority in which it is vested, but the power to cancel for condition broken cannot be exerted without allowing the holder an opportunity to have the asserted default judicially determined. P. 296 U. S. 517.

7. Upon review under Act No. 70, 1917, of Puerto Rico of an order of the Public Service Commission cancelling a franchise for breach of condition, the insular district and the supreme courts are confined to the questions whether the order was (1) reasonable, i.e., not capricious, arbitrary, or confiscatory, (2) in conformity with law, and (3), based upon incompetent evidence, and the court may decide the questions of law and affirm or reverse, or may remand the record to the commission for further action, but it cannot amend or modify the commission's order.

Held:

(1) These functions are strictly judicial. P. 296 U. S. 516.

(2) The Circuit Court of Appeals for the First Circuit has jurisdiction to review the decision of the Insular Supreme Court on the reasonableness of the commission's order. P. 296 U. S. 517.

8. Objection, first made in the Circuit Court of Appeals, that appeals from an administrative order cancelling a franchise owned by a limited partnership in Puerto Rico were not taken by the parties in interest, because the respondent in the administrative proceeding chanrobles.com-red

Page 296 U. S. 508

was the partnership, described as composed of certain individuals, whereas the appeals were taken in the names of the individuals as members of the partnership -- held (1) too late, and also (2) without merit. P. 296 U. S. 518.

9. An answer on the merits admits the actor's capacity to sue. P. 296 U. S. 519.

10. The facts in this record support the conclusion of the Public Service Commission and the Insular courts that the holder of the franchise, by failing to keep clear the outlet of the lake, over which it had control, and thus allowing the waters to rise above the limits specified in the franchise, was responsible for a long continued overflow resulting in damage to public and private property, and the order cancelling the franchise is not shown to be capricious, arbitrary, or otherwise contrary to law. P. 296 U. S. 520.

74 F.2d 637 reversed.

Certiorari to review the reversal of a judgment of the Supreme Court of Puerto Rico sustaining an order of the Public Service Commission cancelling a franchise.