Arizona Corp. Commission v. Tucson Ins. and Bonding Agency

• Decision Date: 14 June 1966
• Docket Number: No. 2,CA--CIV,2
• Citation: 415 P.2d 472,3 Ariz.App. 458
• Parties: ARIZONA CORPORATION COMMISSION, and John P. Clark, A. P. Buzard and E. T. Williams, Jr., as members of and comprising tge same, Appellants, v. TUCSON INSURANCE AND BONDING AGENCY, a corporation, and Standard Realty Company, Incorporated, a corporation, Appellees. 103.
• Court: Arizona Court of Appeals

Page 472

415 P.2d 472

3 Ariz.App. 458

ARIZONA CORPORATION COMMISSION, and John P. Clark, A. P. Buzard and E. T. Williams, Jr., as members of and comprising tge same, Appellants, v. TUCSON INSURANCE AND BONDING AGENCY, a corporation, and Standard Realty Company, Incorporated, a corporation, Appellees.

No. 2 CA--CIV 103.

Court of Appeals of Arizona.

June 14, 1966.

Darrell F. Smith, Atty. Gen., Earl H. Carroll, Sp. Asst. Atty. Gen., Phoenix, for appellants.

Dunseath, Stubbs & Burch, by Robert B. Buchanan, Tucson, for appellees.

HATHAWAY, Judge.

The Arizona Corporation Commission has appealed from a judgment entered by the superior court of Pima County vacating and setting aside its order denying appellees' petition to delete 160 acres owned by them and included within an area certificated to Hidden Wells Water Company, Inc., a public service corporation. Briefly, the procedural chronology is as follows:

On November 24, 1961, the appellees filed with the Arizona Corporation Commission their petition for deletion. They alleged therein that they had had no notice of the hearing on Hidden Wells' application for a certificate held December 13, 1960; that the appellee, Tucson Insurance and Bonding Agency, was seeking a utility water certificate for the area sought to be deleted from Hidden Wells; that the area sought to be deleted, combined with other land owned by appellees, could be made a part of an orederly and integrated public service development by appellees; and that appellees had been deprived of their property without due process of law.

The commission issued to Hidden Wells an order to show cause why the requested deletion should not be granted, and the matter was heard on January 5, 1962, in conjunction with another application of appellees not involved in this appeal.

The commission took the deletion request under advisement and on June 7, 1962, entered an order denying appellees' petition on the grounds that it would not be in the public interest to delete the area. The appellees applied for a rehearing and, upon its denial by operation of law, filed suit in superior court to set aside the commission's order.

The case was tried to the court and the commission's order was vacated as a result thereof. The commission assails the judgment below on several grounds:

(a) The findings of fact were immaterial and unsupported by competent evidence.

(b) The trial court's conclusions of law were erroneous.

(c) Appellees' claim in superior court relied upon grounds not set forth in the application to the commission for a rehearing.

The proceedings in superior court were in the nature of a trial de novo. Arizona Corporation Commission v. Southern Pacific Co., 87 Ariz. 310, 312, 350 P.2d 765 (1960); Corporation Commission v. People's Freight Line, Inc., 41 Ariz. 158, 161, 16 P.2d 420 (1932). Consequently the trial court was not bound by the rule governing this court's disposition of an appeal that, if any reasonable evidence sustains the order of a lower tribunal, we will not consider the weight of the evidence or the inferences drawn therefrom by the trial court. The superior court had the right to form its own independent judgment as to the conclusion to be drawn from the evidence. Arizona Corporation Commission v. Fred Harvey Transportation Co., 95 Ariz. 185, 190, 388 P.2d 236 (1964); Corporation Commission v. Southern Pac. Co., 55 Ariz. 173, 176, 99 P.2d 702 (1940). Furthermore it was not restricted to a review of the evidence presented to the commission but might properly consider new evidence not considered by the commission. Gibbons v. Arizona Corporation Commission, 75 Ariz. 214, 217, 254 P.2d 1024 (1953); Arizona Corporation Commission v. Reliable Transp. Co., 86 Ariz. 363, 370, 346 P.2d 1091 (1960).

The following findings of fact were made by the trial court:

'3. The plaintiffs' property is undeveloped land and there is not at the present time, nor has there been at any time in the past, a need or demand for water service to the area.

'4. The plaintiffs' property was included in a certificate of convenience and necessity issued by the defendant Arizona Corporation Commission to Hidden Wells Water Company, Inc. on December 30, 1960, in Decision No. 32710, Docket No. U--1456.

'59 The plaintiffs did not receive notice nor did they have knowledge of the hearing held by the Arizona Corporation Commission on December 13, 1960, at which the application of Hidden Wells Water Company, Inc. for a certificate of convenience and necessity over territory which included plaintiffs' property, was granted.

'6. It has been the declared policy, custom and practice of the Arizona Corporation Commission to delete 160 acres or more of property located in Pima County, Arizona if the owner of the property, or his representative, protests in writing prior to the hearing, or appears at the hearing to protest the inclusion of his property in the certificate applied for.

'7. Had the plaintiffs known of the December 13, 1960 hearing on the Hidden Wells Water Company, Inc., application for a certificate of convenience and necessity which included their property they would have appeared at the hearing and objected to the inclusion of their property in the certificate.

'8. The representative of the owner of 70 acres of land within the area included in the Hidden Wells Water Company, Inc. application for a certificate of convenience and necessity obtained a deletion of his property when he appeared and objected at the hearing on December 13, 1960.

'9. Had the plaintiffs appeared at the hearing on December 13, 1960 and objected to the Hidden Wells Water Company, Inc. application to include their property in a certificate of convenience and necessity, the Arizona Corporation Commission would have deleted plaintiffs' property from the area certificated to Hidden Wells.

'10. When requested by the landowner it has been the declared policy, custom and practice of the Arizona Corporation Commission to delete areas of 160 acres or more from previously issued certificates of convenience and necessity when the certificate has not been activated.

'11. Plaintiffs, after learning that their property had been certificated to Hidden Wells Water Company, Inc. acted diligently in petitioning the Arizona Corporation Commission for a deletion of their property.

'12. Hidden Wells, Water Company, Inc. has no customers, facilities or investment in the property owned by plaintiffs, nor has it exercised or activated its certificate since obtaining the same in December, 1960.

'13. The public interest could not have been detrimentally affected by the deletion of plaintiffs' property from the certificate held by Hidden Wells Water Company, Inc.'

Although we as a reviewing court are bound by the trial court's findings of fact where supported by the evidence, Ali v. Sitts, 1 Ariz.App. 439, 442, 404 P.2d 100 (1965), we are not bound by the conclusions of law based upon those findings of fact. Miller v. Boeger, 1 Ariz.App. 554, 557, 405 P.2d 573 (1965); Brasher v. Gibson, 2 Ariz.App. 91, 406 P.2d 441, 450 (1965).

The trial court concluded that it would not have been contrary to the public interest to have granted the application for deletion since the public interest was not involved and that the order denying deletion was unreasonable and unlawful. Although the superior court proceedings were a trial de novo, the appellees had the burden of proving the invalidity of the commission's decision by clear and satisfactory evidence. Arizona Corporation Commission v. Fred Harvey Transportation Co., supra; A.R.S. § 40--254, subsec. E; 73 C.J.S. Public Administrative Bodies and Procedure § 206. We do not believe that they sustained this burden.

The policy in this state regarding public service corporations is one of regulated monopoly rather than one of free-wheeling competition. Arizona Corporation Commission v. Fred Harvey Transportation Co., supra; Old Pueblo Transit Co. v. Arizona Corporation Commission, 84 Ariz. 389, 390, 329 P.2d 1108 (1958). The corporation commission in issuing a certificate of convenience and necessity performs a judicial function and the certificate represents the judgment of the commission reached in the same manner as a judgment of a court of record....