Boston Real Estate Bd. v. Department of Public Utilities

• Decision Date: 26 July 1956
• Citation: 334 Mass. 477,136 N.E.2d 243
• Parties: , 15 P.U.R.3d 47 BOSTON REAL ESTATE BOARD et al. v. DEPARTMENT OF PUBLIC UTILITIES et al. QUAKER BUILDING CO. v. DEPARTMENT OF PUBLIC UTILITIES et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 243

136 N.E.2d 243

334 Mass. 477, 15 P.U.R.3d 47

BOSTON REAL ESTATE BOARD et al. v. DEPARTMENT OF PUBLIC UTILITIES et al.

QUAKER BUILDING CO. v. DEPARTMENT OF PUBLIC UTILITIES et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued March 5, 1956.

Decided July 26, 1956.

Richard J. Walsh, and Robert S. Zollner, Boston, for Quaker Building co.

Matthew S. Heaphy, Asst. Atty. Gen., for Department of Public utilities.

Frederick M. Ives, Boston, Finley H. Perry, Dover, for Boston Edison Co.

William F. Byrne, R. Gaynor Wellings and Clarence A. Roberts, Boston, for Boston Real Estate Board and others.

Before QUA, C. J., and RONAN, COUNIHAN and WHITTEMORE, JJ.

WHITTEMORE, Justice.

These are bills in equity under G.L. (Ter.Ed.) c. 25, § 5, ¹ to review an order of the department of public utilities (the department) dated March 4, 1953, addressed to the elimination of the competitive resale of electricity purchased from Boston Edison Company (Edison) at wholesale rates. The plaintiffs in the first case are owners, managers and operators of rental real estate in Boston, who engage in or have an interest in the business of resale of electricity to tenants or others who can be served without crossing a public way (see G.L. (Ter.Ed.) c. 164, §§ 87, 88), and the Boston Real Estate Board, a corporation certain of whose members own, manage or operate buildings in Boston, acting in their own behalf and for other owners and operators of commercial properties in Edison's territory alleged to have a common interest with the plaintiffs. The plaintiff in the second case (Quaker) since its organization in 1911 has, as its chief business, sold steam and electricity to owners and occupants in the block bounded by Devonshire, Summer, High, Federal, and Franklin streets in Boston. Its customers are eighty-three in number, in twenty-one buildings, and only four of them are Quaker's tenants. Edison was allowed to intervene in each case. The cases, with a companion case, Kargman v. Department of Public Utilities, Mass., 136 N.E.2d 255, were referred to a master.

A single justice denied motions to recommit the master's report and otherwise reserved and reported the cases for our determination of all questions of law and fact appearing on the record.

The department's findings show that the practice of resale, or submetering, arose from Edison's efforts in its development period to secure off-peak customers who could be served without corresponding increase in generating capacity. It was advantageous to Edison and its existing customers, largely residential, for Edison to obtain additional revenue at little additional expense by offering wholesale rates to induce self generators of electricity, including the many 'block plants,' five hundred in number in 1912, to cease business and buy Edison current. Most of these plants were eliminated but a number of the owners remained in the business of within-the-block or within-the-building distribution and others were attracted to it.

As this occurred and the balance of supply and demand changed with the great growth of the use of electricity, Edison concluded that this resale hurt its revenues and beginning in 1930 Edison from time to time took various formal and informal steps to discourage and restrict the practice. The department stated views adverse to the practice in 1947 in Re A. W. Perry Inc. D.P.U. 7697 (denial of a petition to order Edison to supply alternating current in place of direct, for resale) and again in 1949 in Re Boston Edison Co. D.P.U. 8228 (the Rate R case in which a special higher rate for resellers was disapproved). Edison then filed a new amended schedule and, following hearings in respect of that schedule, the subject order was entered.

The department took note of the development and disapproval of the practice elsewhere and in its conclusions found and ruled that the practice of competitive resale is fundamentally unsound and against the public interest, that it results in the utility supplying current to competitors at rates which deprive it of revenue which the utility must obtain by addition to the bills of other customers if it is to receive a just return, that Edison is threatened with expansion of the practice, that the order will not mean an increase in Edison's net earnings, that Edison and the department are not estopped, and that Quaker's position, though different in certain aspects, 'must fall with the rest.'

The order, dated March 4, 1953, and the conforming schedule filed by Edison on March 17 to be effective April 1, 1953, provide (paragraph 18) that Edison after one year shall not, without the department's approval, supply electricity for resale except by way of rent inclusion, a term referring to arrangements whereby the tenant pays for current by paying his rent unaffected by extent of use, and except in special cases stated.

The order manifestly contemplates that in the usual case the reseller will change to multiple metering, which term means a separate meter for each of the group comrised of the former reseller and his former customers. It provides however (7[b]) for a limited use of series metering (a term which refers to the use of a master meter to measure all the current going into the building and separate meters for billing the tenants at usual retail rates), and a determination of the charge to the holder of the master meter by a computation related to the difference between the total on the master meter and the total on the tenants' meters. Series metering may be used in these cases where the building has been wired therefor before the order date and the 'landlord in good faith notifies the company that rewiring for the installation of multiple metering equipment would be impracticable.'

The special exceptions to the prohibition of the sale of electricity for resale permit sales (1) to municipal light plants and to electric companies whose customers are outside Edison's territory (2) as provided in a special contract filed with the department under c. 164, § 94; (3) as lawfully directed and required by the department under c. 164, §§ 92 or 92A; and (4) at locations of resale existing July 1, 1951, where the customer has refused or failed to rewire for series or multiple metering. There is a provision in paragraph 18(4) for the rate of charge in such cases which is designed, as the department has stated, to be 'a rate made up of the sum of the estimated rates which would be collected from the building itself and the individual tenants involved if they were severally served direct, including the sum of the estimated demands.' The other provisions in the order and schedule so far as material are referred to below.

Edison's Intervention.

It was proper to allow Edison to intervene as a party defendant. Manifestly Edison is at interest. Justice is served and the court assisted by its presence as a party. The procedure on certiorari is irrelevant, G.L. (Ter.Ed.) c. 249, § 4. While the proceedings are in this court as an appeal, the appeal is from an order in proceedings in which Edison was a party. Our jurisdiction is in equity, c. 25, § 5. There can be no doubt of our power to allow such intervention.

The Reference and Master's Report.

The Department's Rulings.

Edison appealed from the appointment of the master and objected to the master's receiving any evidence other than the record and transcript of the proceedings in the department. The order being in the nature of legislative action in the rate making field it was necessary that the court 'act upon its own independent judgment as to both law and fact' in the issues involved in 'a claim of confiscation or of other violation of constitutional right', Opinion of the Justices, 328 Mass. 679, 687, 106 N.E.2d 259, 264, and it was appropriate to appoint a master to find the relevant facts. Lowell Gas Co. v. Department of Public Utilities, 324 Mass. 80, 89, 84 N.E.2d 811; Opinion of the Justices, 328 Mass. 679, 106 N.E.2d 259; New England Telephone & Telegraph Co. v. Department of Public Utilities, 327 Mass. 81, 97 N.E.2d 509; Massachusetts Bonding & Ins. Co. v. Commissioner of Insurance, 329 Mass. 265, 271, 107 N.E.2d 807; Ohio Valley Water Co. v. Ben Avon Borough, 253 U.S. 287, 40 S.Ct. 527, 64 L.Ed. 908. The master properly ruled that he was required to receive evidence bearing on the constitutional questions.

Apart from constitutional questions there is no basis for a redetermination of facts in this court. Lowell Gas Co. v. Department of Public Utilities, 324 Mass. 80, 84, 85, 84 N.E.2d 811, and cases cited. The master, acting under a broad rule ('to hear the parties and their evidence'), received additional evidence, not to 'contradict findings of fact by the department' but in order to 'report facts pertinent to claims by the plaintiffs that the department's order was unlawful on other grounds than those of constitutional prohibitions.' Although there was no occasion for the receipt of this evidence, in the view we take of these cases no one has been harmed. For reasons hereinafter stated we rule that the order of the department is lawful, and, on the nonconstitutional issues, we so rule on the facts found by it. The plaintiffs may not complain that, at their offer and urging, additional facts or aspects of facts tending to support the lawfulness of the order are available to us as findings in the master's report.

So far as recommittal was sought for further findings by way of conclusion from facts found, it would not be necessary now as the facts found are available to us. The additional facts asked to be found on recommittal would not be significant in our view of the case.

There is no occasion to pass on specific objections, that is, exceptions--see Pearson v. Mulloney, 289 Mass. 508, 514, 194 N.E. 458, to the master's report. In the following paragraphs we state the important findings on which we rely. We have no given weight to any which we do not...