Boone County Rural Elec. Membership Corp. v. Public Service Commission of Ind., 19184

• Decision Date: 22 December 1958
• Docket Number: No. 19184,19184
• Citation: 155 N.E.2d 149,129 Ind.App. 175
• Parties: , 27 P.U.R.3d 356 BOONE COUNTY RURAL ELECTRIC MEMBERSHIP CORP., Hancock County Rural Electric Membership Corp., Hendricks County Rural Electric Membership Corp., Indiana Statewide Rural Electric Cooperative, Inc., Johnson County Rural Electric Membership Corp., Morgan County Rural Electric Membership Corp., Southeastern Indiana Rural Electric Membership Corp., Appellant, Knox County Rural Electric Membership Corp., Intervenor-Appellant, v. PUBLIC SERVICE COMMISSION OF INDIANA, John W. Van Ness, Chairman and Member, G. G. Skelton, Member and Ira L. Haymaker, Member of Said Commission, Appellees.
• Court: Indiana Appellate Court

Page 149

155 N.E.2d 149

129 Ind.App. 175, 27 P.U.R.3d 356

BOONE COUNTY RURAL ELECTRIC MEMBERSHIP CORP., Hancock County

Rural Electric Membership Corp., Hendricks County Rural

Electric Membership Corp., Indiana Statewide Rural Electric

Cooperative, Inc., Johnson County Rural Electric Membership

Corp., Morgan County Rural Electric Membership Corp., Southeastern Indiana Rural Electric Membership Corp., Appellant, Knox County Rural Electric Membership Corp., Intervenor-Appellant, v. PUBLIC SERVICE COMMISSION OF INDIANA, John W. Van Ness,

Chairman and Member, G. G. Skelton, Member and Ira

L. Haymaker, Member of Said Commission, Appellees.

No. 19184.

Appellate Court of Indiana, In Banc.

Dec. 22, 1958.

Davis, Hartsock & Wright, Indianapolis, Parr, Parr & Parr, Lebanon, for appellants.

Shake & Shake, Vincennes, for Knox Co. REMC.

William Wolf, Greenfield, for Hancock Co. REMC.

Claud Raber, Danville, for Hendricks Co. REMC.

James F. Griggs, Franklin, for Johnson Co. REMC.

Hugh Couch, Martinsville, for Morgan Co. REMC.

Ewing Wright, Osgood, for Southeastern Indiana REMC.

Edwin K. Steers, Atty. Gen., Frank E. Spencer, Deputy Atty. Gen., for appellee.

COOPER, Judge.

This is an appeal and/or (for a judicial review) of an order by the Public Service Commission of Indiana, wherein said Commission entered 'Ex Parte Order #27605,' said Order bearing the approval date of March 7, 1958. The pertinent part of said 'Ex Parte Order' as far as this judicial review, pursuant to chapter 189, Acts of the General Assembly, 1957, is concurned, reads as follows:

'The Public Service Commission of Indiana (sometimes hereinafter referred to as 'the Commission') having before it the information that prior to this date the majority, if not all, of the loans heretofore made by the United States Government through its Rural Electrification Administration (hereinafter sometimes referred to as 'the REA') to corporations operating in Indiana under the Indiana Rural Electric Membership Corporation Act of 1935, as amended (hereinafter sometimes referred to as 'REMCs') were made without any approval or authority from this Commission having been sought or granted; and the Commission being duly advised in the premises is of the opinion and now finds:

'The Commission should act under its general powers conferred upon it by the Legislature to administer the Public Service Commission Act and all other acts pertaining to businesses affected with a public interest which come under the jurisdiction of the Public Service Commission of Indiana, and should make a ruling as to the status of loans heretofore made and/or approved by the REA to REMCs in Indiana, and the Commission further should state its policy with regard to such loans from the REA as may be sought by the REMCs in the future.

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'The Commission has taken the position that corporations organized under the Indiana Rural Electric Membership Corporation Act of 1935, as amended, are public utilities (as declared by the Supreme Court of Indiana in the case of Kosciusko County [REMC] v. Public Service Commission of Indiana and the Northern Indiana Public Service Company--1947-225 Ind. 666 , and as defined by the Public Service Commission Act, Burns' Ind.Stats.Ann. 54-105); and that the Public Service Commission Act shall apply to REMCs where said Act is not in conflict with the REMC Act; that as to the matter of securing permission from the Commission before incurring indebtedness and issuing evidence of indebtedness therefor, there is no conflict between the two Acts--upon silence of the REMC Act, the Public Service Commission Act applies; and since the Public Service Commission Act provides, as set forth in Burns' Ind.Stats.Ann. 54-503, 54-505 and 54-510, and other applicable sections, that no public utility shall encumber its used or useful property or business, or any part thereof, without the approval of the Public Service Commission, approval from this Commission should have been obtained before any indebtedness was incurred, and evidence of indebtedness issued therefor.

'The Commission finds that since the Commission had knowledge of the fact that loans were being made through the REA to REMCs within the State of Indiana since shortly after the passage of the REMC Act in 1935, and this Commission did not then, and has not at any time prior to this date, taken affirmative steps to enforce provisions of the law which would require the obtaining of authority from this Commission by REMCs on the same basis upon which other public utilities are required to obtain authority before incurring any indebtedness and issuing evidence of indebtedness therefor; and since there may have been some confusion as to the effect of the provisions of the REMC Act prior to the pronouncement of the Supreme Court of Indiana in 1947 in the Kosciusko case hereinabove referred to, which unequivocally declared that REMCs are public utilities in Indiana, it can only fairly be said that the REMCs acted in good faith in obtaining loans from the United States Government through the REA without first having obtained authority from this Commission to incur the indebtedness and to issue evidence of indebtedness therefor; and further, it can only be said that United States Government through the REA acted in good faith in making said loans without a showing that the authority of this Commission had first been obtained by the REMC before the application for the loan was made in that it had no official knowledge of the fact that under the law of Indiana such authority from this Commission was necessary.

'While this Commission cannot now, retroactively and without hearings, authorize and approve the loans which have heretofore been made, and/or authorized, by the REA, as hereinbefore set out, the Commission can, and hereby does, rule that said loans shall not be considered and treated by this Commission as having been made unlawfully, and no penalty shall be levied by reason of the making of said loans; further, that the loans heretofore approved by the REA on which the full amount has not as yet been advanced to the REMC borrower, shall be treated by this Commission as loans already made and consummated, and shall be treated by this Commission as being in the non-penalty category, but only to the extent of the loans itemized and set forth heretofore in this order; and no immunity shall attach to any loan applications now on file with, or pending, before the REA which were not approved prior to February 20, 1958, and are not set forth hereinbefore in this order.

'The Commission further finds and hereby declares that as a matter of policy, corporations, organized and/or operating, within the State of Indiana under the Indiana Rural Electric Membership Corporation Act, as amended, must first obtain authority from this Commission before incurring any indebtedness and issuing evidence of indebtedness therefor, including the obtaining of loans from the United States Government through its Rural Electrification Administration, in the same manner in which other public utilities must obtain authority from this Commission under the Public Service Commission Act, and a failure to do so in the future on any loan which has not heretofore been approved by the REA and which is not set forth hereinbefore in this order will be considered by this Commission as a violation of the law. Since the federal law authorizing the Rural Electrification Administration provides that no loan shall be made unless the state authority having jurisdiction in the premises is first obtained, it is anticipated that in view of this official statement of the jurisdiction of the Public Service Commission of Indiana and this declaration of policy as set forth in this order, the REA will acquiesce in this policy as to all loan applications not approved prior to February 20, 1958 and set forth hereinbefore in this order by requiring evidence of authority from this Commission to incur indebtedness, issue evidence of indebtedness therefore and encumber useful plant, property or business before approving any loan to any corporation organized and/or operating within the State of Indiana and coming under the jurisdiction of the Indiana Public Service Commission, including, but without limiting the generality thereof, REMCs.

'Some reference should here be made to three previous orders of this Commission, to-wit: Cause No. 27395 In The Matter of The Joint Petition of Public Service Company of Indiana, Inc., and Johnson County Rural Electric Membership Corporation, approved January 31, 1958; Cause No. 27336 In The Matter of The Joint Petition of Public Service Company of Indiana, Inc., and Southeastern Indiana Rural Electric Membership Corporation, approved February 7, 1958; and Cause No. 27441 In The Matter of The Joint Petition of Public Service Company of Indiana, Inc., and Clark County Rural Electric Membership Corporation, approved February 14, 1958, two of which orders contained statements that the REMC involved should first obtain permission from this Commission before drawing down from the REA the additional sums of money on the loans theretofore authorized by REA, but not fully advanced, and that a failure to obtain such permission from this Commission would be considered by this Commission as a violation of the law by the REMC. In view of the rulings contained in this Ex Parte Order, the statements in the three aforementioned orders are superseded and should be given no effect in the future insofar as they conflict with the rulings and declarations made herein, including, but without limiting the generality thereof, the provision that the drawing down of any additional sum of money on the loans heretofore authorized without first obtaining permission from this Commission will be considered a violation of the law; and to the extent of the conflict, if any, the conflicting provisions of the three aforementioned provisions are hereby rescinded.

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