Citizens Utilities Co. of Cal. v. Superior Court of Santa Cruz County

• Citation: 31 Cal.Rptr. 316,382 P.2d 356,59 Cal.2d 805
• Court: United States State Supreme Court (California)
• Decision Date: 13 June 1963
• Parties: , 382 P.2d 356 CITIZENS UTILITIES COMPANY OF CALIFORNIA, Petitioner, v. The SUPERIOR COURT OF SANTA CRUZ COUNTY, Respondent; SAN LORENZO VALLEY COUNTY WATER DISTRICT, Real Party in Interest. S. F. 21175.

Page 316

31 Cal.Rptr. 316

59 Cal.2d 805, 382 P.2d 356

CITIZENS UTILITIES COMPANY OF CALIFORNIA, Petitioner, v. The SUPERIOR COURT OF SANTA CRUZ COUNTY, Respondent SAN LORENZO VALLEY COUNTY WATER DISTRICT, Real Party in Interest.

S. F. 21175.

Supreme Court of California, In Bank.

June 13, 1963.

Rehearing Denied July 10, 1963.

Bacigalupi, Elkus & Salinger, Claude N. Rosenberg and William G. Fleckles, San Francisco, for petitioner.

No appearance for respondent.

Wilson, Harzfeld, Jones & Morton and John E. Lynch, San Mateo, for real party in interest.

Martin McDonough, McDonough, Holland, Schwartz, Allen & Wahrhaftig, Sacramento, Raymond McClure, North Sacramento, and Myron B. Haas, Seaside, as amici curiae on behalf of real party in interest.

PETERS, Justice.

Prohibition is sought by Citizens Utilities Company of California to restrain the superior court from proceeding to trial in an eminent domain action pending in that court in which action Citizens is the condemnee. It is contended that the respondent court has no jurisdiction to proceed.

The real party in interest, San Lorenzo Valley County Water District, filed in respondent superior court a complaint by which it sought to condemn, pursuant to the general eminent domain statutes (Code Civ.Proc., pt. 3, tit. 7), petitioner's entire Boulder Creek District water system in Santa Cruz County, excepting only office equipment and furniture. ¹ Petitioner answered this complaint, averring that the value of its water system was $1,500,000, and asserting as an affirmative defense that the condemnation of its water system under the general eminent domain statutes violates petitioner's state and federal constitutional rights because under section 1249 of the Code of Civil Procedure ² the trier of fact is prevented from assessing as compensation the value of improvements and extensions made by petitioner to its water system in discharge of its obligations subsequent to the issuance and service of summons in the eminent domain action. Thereafter, petitioner moved in respondent court to dismiss the proceeding on the ground that condemnation of its water system under the provisions of the Code of Civil Procedure, including section 1249, was unconstitutional, and, that therefore the court lacked jurisdiction. In support of this motion petitioner presented an affidavit by its general manager which averred that: 'On December 31, 1961 (i. e., after the valuation date fixed by Code of Civil Procedure section 1249) Defendant had improvement work in progress in connection with the said water system amounting to the sum of $350,614,' and that during the period November 30, 1961, through January 31, 1962, alone, defendant expended $24,200 'for the purpose of preserving and improving its said water system.' The affiant further declared that the petitioner would be required to make similar expenditures for improvements and extensions 'during the entire duration of these proceedings.'

The trial court denied the motion to dismiss. In its memorandum opinion it held that Code of Civil Procedure section 1249 could not constitutionally be applied and was not intended by the Legislature to apply where, as here, post-valuation date expenditures are made involuntarily under compulsion of law; that the failure of the Legislature to provide for this contingency could be remedied by the trial court pursuant to its inherent power to devise a proper procedure (citing the inverse condemnation cases); and, that it would, therefore, set the valuation date up to the date of trial in order to protect petitioner's right to full compensation.

Thus the trial court decided the only issue presented to it, namely, whether section 1249 of the Code of Civil Procedure could constitutionally be applied to petitioner so as to prevent recovery of compensation or damages for any improvements and betterments that petitioner was required to make to its system after the date of the summons and before judgment. The trial court decided this issue, by holding that the section could not constitutionally apply to public utility condemnations, but that, in the absence of statute, it had the power to devise a method by which an allowance could be made. It devised such a procedure by providing that in this case the value of such property should be fixed as of the day of trial.

After denial of the motion, petitioner filed this petition for a writ of prohibition. In this petition it alleges, and its major argument is, that section 1249 of the Code of Civil Procedure is unconstitutional as applied to public utilities, and that being so there is no method provided by law for allowing compensation for compulsory improvements made after the date of the summons, and that the trial court had no constitutional power to devise a method for such allowance. Based on these premises, it concluded that the respondent trial court was without jurisdiction to proceed, and that the only way its properties could be condemned would be before the Public Utilities Commission under the procedure set forth in the Public Utilities Code. ³ In addition to this major contention, petitioner in its petition for prohibition alleged other facts and made another contention not presented to or made in the trial court. From these new facts and from the argument made in support of this new contention, it now appears that real party must pay the condemnation award from the proceeds of a bond issue, and that such bonds have not as yet been sold, and may not be sold at the time the condemnation award is entered. It thus appears that real party, prior to the commencement of the condemnation action, successfully submitted a bond proposal to the inhabitants of the district by which it received authority to issue up to $1,500,000 of revenue bonds for the purpose of acquiring a water supply system. These bonds have not as yet been sold, but there is no allegation nor contention that they are unsalable or that real party intends to refuse to sell them in time to pay the condemnation award when it is made. The contention is that at the time of judgment no money may be available to pay such judgment because the bonds may not have been then sold, and may not be sold for as much as a year after judgment. Petitioner contends that during this possible period it may be required to make improvements and additions to its water system for which the award would not compensate it. It is therefore argued that there is no statutory method provided for such compensation and that there is no feasible method by which the trial court can provide for such payment in a Code of Civil Procedure condemnation. Therefore, so it is argued, the trial court has no jurisdiction to proceed and real party must be relegated to a condemnation under the Public Utilities Code.

These allegations and arguments present the following four points:

1. Is section 1249 of the Code of Civil Procedure applicable to a public utility condemnation?

2. If not, did the trial court have the inherent power to work out a procedure, and if so is the proposed method adequate?

3. May petitioner in prohibition raise new facts and new contentions, based on possibilities, not urged before the trial court?

4. If so, is there any possible procedure that could be adopted by the trial court that would result in an award to petitioner that would fully compensate it for its property?

First, as to the applicability of section 1249 of the Code of Civil Procedure to public utility condemnations. That section purports to fix the date of valuation for purpose of condemnation at the date of summons, and purports to prohibit any allowance of compensation for improvements made after that date. A public utility in some respects is in a different position from a private landowner. The latter is not under compulsion to make any improvements on his privately owned property after service of summons. Such subsequent improvements, in most cases, would be of no value to the condemner, and in many cases would have been added by the owner in bad faith simply to increase the valuation. Thus, in the ordinary case, the application of such a prohibition as is found in the code section is fair, equitable, and proper.

But to apply the prohibition to a necessarily expanding public utility would be unfair, unrealistic and unconstitutional. A public utility in the nature of a water company is obligated by law to maintain and extend an adequate water service to all users in the district. (Pub.Util.Code, § 451; California Water & Telephone Co. v. Public Util. Comm., 51 Cal.2d 478, 493, 334 P.2d 887.) It is required by law, whether or not a condemnation action is pending, that the utility continue to make necessary improvements, additions and betterments to its system. Since the taking of property in eminent domain without the payment of just compensation is prohibited by our Constitution, it would be unconstitutional to take a utility's property valued as of the date of the summons and without compensating it for involuntary and compulsory improvements installed by it after such date that result in an increase of value of the system. For this reason the trial court properly held that the prohibitions in the section were not applicable to public utility condemnations. This interpretation of the section is in accord with the basic principle of statutory construction that laws should be sensibly interpreted, and that general terms in statutes will not be construed to lead to unjust or oppressive results. (Cotton v. Superior Court, 56 Cal.2d 459, 465, 15 Cal.Rptr. 65, 364 P.2d 241; see County of Los Angeles v. Riley, 6 Cal.2d 625, 629, 59 P.2d 139, 106 A.L.R. 903.)

The conclusion that section 1249 cannot constitutionally apply to public utility condemnations, does not mean that there is no way a trial court, in a Code of Civil Procedure condemnation, can make an award for improvements made after the date of summons. Certainly, it...