Brunswick & T. Water Dist v. Maine Water Co.

• Decision Date: 14 December 1904
• Citation: 99 Me. 371,59 A. 537
• Parties: BRUNSWICK & T. WATER DIST v. MAINE WATER CO.
• Court: Maine Supreme Court

59 A. 537

99 Me. 371

BRUNSWICK & T. WATER DIST

v. MAINE WATER CO.

Supreme Judicial Court of Maine.

Dec. 14, 1904.

(Official.)

Action by the Brunswick & Topsham Water District against the Maine Water Company under Priv. & Sp. Laws 1903, p. 245, c. 158. After the appointment of appraisers the petitioner filed a written request for instructions to the appraisers so appointed. The case was thereupon reported to the law court to determine what instructions, if any, should be given to the appraisers so appointed. Instructions given.

Argued before WISWELL, C. J., and WHITEHOUSE, STROUT, SAVAGE, PEABODY, and SPEAR, JJ.

Weston Thompson and Barrett Potter, for petitioner.

C. F. Libby, F. W. Robinson, and Levi Turner, for Portland Trust Co. Orville D. Baker, for Maine Water Co.

SAVAGE, J. The Brunswick & Topsham Water District was incorporated by act of the Legislature (chapter 158 of the Private and Special Laws of 1903). By section 6 of that act it was authorized to take by condemnatory proceedings the entire plant, property, and franchises, rights and privileges, of the Maine Water Company, within the district, with the exception of Thompson's brook and its tributaries. It was also provided in section 7 for the appointment of appraisers by the court, who should, after due notice and hearing, fix the valuation of the plant, property, and franchises taken, so that the Maine Water Company should receive just compensation therefor. As was the case in Kennebec Water District v. Waterville, 97 Me. 185, 54 Atl. 6, 60 L. R. A. 856, so here, it was provided that either party might ask the court for instructions to the appraisers, and that all questions of law arising upon such requests for instructions might be reported to the law court for determination before the appraisers should act. The water district has commenced the condemnatory proceedings by petition filed in court, as provided by the act, appraisers have been appointed, and the petitioner has availed itself of the privilege of asking for instructions to the appraisers.

We cannot refrain from saying, as we have intimated in the Waterville Case, supra, that while there are some practical advantages in obtaining the judgment of the court in regard to the proper rules governing the fixing of compensation and the assessment of damages in cases of this character in advance of the hearing by the appraisers, yet there are many difficulties, if not dangers, in attempting to formulate rules which are to be applied to facts not yet ascertained. While it may be easy enough to state rules in the abstract, it is much more satisfactory, in an opinion of the court, to express them in terms which are applicable to the facts in the precise case in hand. We cannot refuse to perform the duty laid upon us by the Legislature, but it must always be understood that our answers to these questions are intended to be given only in the most general and comprehensive terms, which may or may not be found to be fitted to the facts which may subsequently be developed. No other course would be wise or safe.

1. We are asked to say that: "In applying the rule that the basis of all calculation as to the reasonableness of rates to be charged by a public service corporation is the fair value of the property used by it for the convenience of the public, franchise values are to be wholly disregarded, and the element of going concern value is to be considered only as involved in the structure value; that property value, in this connection, means structure value only." As no particular franchises are spoken of, we assume that reference is made to the ordinary franchises by which the company maintains and operates its existing plant, supplies water to customers, and demands rates from them. In order to see the precise bearing of the requested instruction, it is necessary to remember that this is a proceeding to ascertain and fix the fair value of a water company's plant and property in active operation, and as well of the franchises by virtue of which it operates the plant and that it is not a proceeding to reduce rates alleged to be excessive, nor is it a proceeding like most of those in which this question has been discussed, and which have been cited by counsel, where it is claimed by a public service company that rates have been made by statute or ordinance unreasonably or unconstitutionally low. All these may or may not arrive at the same conclusion. A public service property may or may not have a value independent of the amount of rates which for the time being may be reasonably charged. A public service company may, under some circumstances, be required to perform its service at rates prohibitive of a fair return to its stockholders, considering their property as an investment merely. Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct. 418, 42 L. Ed. 819; Covington, etc., Turnpike Co. v. Sandford, 164 U. S. 578, 17 Sup. Ct 198, 41 L. Ed. 560; Chicago, Milwaukee & St. Paul Ry. Co. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 702, 33 L. Ed. 970; Cotting v. Kansas City Stock Yards Co., 183 U. S. 79, 22 Sup. Ct. 30, 46 L. Ed. 92. It is true that the fair value of the property used is the basis of calculation as to reasonableness of rates, but, as was pointed out in the Waterville Case, this is not the only element of calculation. There are others; as, for instance, the risks of the incipient enterprise on the one hand, and whether all the property used is reasonably necessary to the service, and whether as a structure it is unreasonably expensive, on the other. For a simple illustration, suppose that a 500 horse power engine was used for pumping when a 100 horse power engine would do as well. As property to be fairly valued, the large engine might be more valuable than the smaller one, yet it could not be said that it would be reasonable to compel the public to pay rates based upon the value of the unnecessarily expensive engine. But it may not be that any of these distinctions are vital to the determination of the pending question. We allude to them merely to show that all of the principles applicable to the two classes of proceedings referred to are not necessarily identical.

Now, what is the property which the district has taken by the power of eminent domain? In the first place, it is a structure, pure and simple, consisting of pipes, pumps, engines, reservoirs, machinery, and so forth, with land rights and water rights. As a structure it has value, independent of any use or right to use, where it is—a value probably much less than it cost, unless it can be used where it is; that is, unless there is a right so to use it. Nevertheless it has value as a structure. But, more than this, it is a structure in actual use; a use remunerative to some extent. It has customers. It is actually engaged in business. It is a going concern. The value of the structure is enhanced by the fact that it is being used in, and in fact is essential to, a going concern business. We speak sometimes of a going concern value as if it is or could be separate and distinct from structure value—so much for structure and so much for going concern. But this is not an accurate statement. The going concern part of it has no existence except as a characteristic of the structure. If no structure, no going concern. If a structure in use, it is a structure whose value is affected by the fact that it is in use. There is only one value. It is the value of the structure as being used. That is all there is of it.

But, again, it is not only a structure, and a structure being used, but it is a structure built, maintained, and used by authority expressly granted to the company by the state; that is, it was built and is maintained and used by virtue of a franchise or franchises. The structure is lawfully in existence, and may rightfully continue to be used as a going concern structure, until the state determines otherwise. This also makes the structure in use more valuable. It is the difference between a structure existing by sufferance and one maintained by right. The franchise, however, is a limited one. It is not perpetual. It may be recalled by the state. It is not exclusive. Other and competing franchises may be granted. It is not absolute. The right may be limited or qualified by express enactment. One franchise is limited in the nature of things, and that is the franchise to charge tolls or rates for water furnished. It cannot charge arbitrary rates beyond the power of revision. It may not, as we have seen, under some circumstances charge rates even fairly remunerative upon the investment. It can only charge reasonable rates in any event. A franchise may exist entirely independent of the structure. There may be franchises when there is no structure. This water company may have franchises within this district which are not connected with the use of the structure which the district has taken. Of that we have no knowledge. But so far as the structure is maintained and used by virtue of a franchise, that fact may add to the value of the structure. One would be likely to pay more for it as a structure if it could be rightfully used than he would if it could not. What is it, then, that the district is taking, and for which the company is entitled to just compensation? It is a structure in actual use, and with a right on the part of its owner to so use it, and to charge reasonable rates to customers for services rendered. This is all. It is threefold in discussion, but it is single in substance. The district obtains and the company yields its plant, its structure; but it is the structure as being used, with the rights to use it as stated; no less, no more. We apprehend that some difficulty in discussion has arisen from attempting to differentiate in logic what is inseparable in fact. The property taken is a single thing, to which belong certain characteristics which affect its value. The thing cannot be taken without these characteristics. If...