Capital Water Co. v. Public Utilities Commission of State

• Decision Date: 29 November 1926
• Docket Number: 4661
• Citation: 44 Idaho 1,262 P. 863
• Parties: CAPITAL WATER COMPANY, Appellant, v. PUBLIC UTILITIES COMMISSION OF THE STATE OF IDAHO, and CITY OF BOISE and J. F. KOELSCH, Respondents
• Court: Idaho Supreme Court

262 P. 863

44 Idaho 1

CAPITAL WATER COMPANY, Appellant, v. PUBLIC UTILITIES COMMISSION OF THE STATE OF IDAHO, and CITY OF BOISE and J. F. KOELSCH, Respondents

No. 4661

Supreme Court of Idaho

November 29, 1926

PUBLIC UTILITY-VALUATION OF PROPERTY FOR RATE-MAKING PURPOSES-FINDINGS-WATER AND WATER RIGHTS-CONSTITUTIONAL LAW-EMINENT DOMAIN-DUE PROCESS OF LAW-ELEMENTS OF VALUE OF WATER RIGHT-EVIDENCE-WORKING CAPITAL-GOING CONCERN VALUE-COST OF CARRYING WATER AS EXPENSE TO UTILITY.

1. By indenture executed between predecessors of utility and previous owner of lands in Krall additions to Boise City, and mesne conveyances, intervenor and others similarly situated acquired a perpetual water right which could not properly be considered as part of utility's property upon which it would be entitled to a valuation for purpose of rate making.

2. Under C. S., sec. 2514, providing that on hearing before Public Utilities Commission to determine value of property of utility for rate purposes the commission shall make written findings of fact on all matters concerning which evidence shall have been introduced, which in its judgment shall have bearing on the value of the utility's property, it need not make specific or minutely detailed findings with regard to every possible question, as to value, on which evidence shall have been offered, but it is enough to make specific findings as to the material issues, and show that consideration was given to all of the relevant and pertinent evidence as to value that was offered.

3. U.S Const., 5th Amend., providing that private property shall not be taken for public use without just compensation is a restriction on the powers of the federal government only.

4. U.S Const., 5th Amend., providing that no state shall deprive any person of property without due process of law, and Const art. 1, secs. 13, 14, providing that no person shall be deprived of property without due process of law, and that private property may be taken for public use only on just compensation being paid, would be contravened by the Public Utilities Commission, in fixing and ordering rates to be charged by a public utility, so clearly undervaluing or failing to value, a water right belonging to it as to amount to a taking of property without due process of law.

5. While the Public Utilities Commission properly refused to value for rate purposes the water right of a public service water company acquired by early appropriation from a river on the basis of present cost of storage water in a government reservoir or other new and independent source of supply, it was error for it to hold that no valuation should be given thereto except the actual cost of acquiring the right.

6. The sum necessary for working capital of a utility is addressed to the sound discretion of the utilities commission, and in the absence of an abuse of discretion its allowance therefor will not be set aside.

7. The utilities commission need not make a separate finding of going concern value, but this will be considered as included in the valuation placed by it on all the property of the utility.

8. The cost to a utility of carrying through its ditch the 100 inches of water which it granted for a right of way constituting a part of the expense of the company's business, the commission should make a finding thereof and fix a rate therefor.

APPEAL from orders of Public Utilities Commission in proceeding to fix rates. Orders set aside.

Commissions orders Nos. 940 and 943 set aside and reversed and remanded with instructions. Petitions for rehearing denied.

J. L. Niday and Oppenheim & Lampert, for Appellant.

The commission failed to make findings of fact in writing upon matters concerning which evidence had been introduced before it having a bearing on the value of the property of this appellant. (C. S., sec. 2514; Capital Water Co. v. Public Utilities Com., 41 Idaho 19, 237 P. 423.)

All of the property of the appellant company used and useful in the service of supplying water, being any proportionate part of its 2,500-inch appropriated water right to lands or persons under a rental arrangement, is in the public service and subject to regulation of the Public Utilities Commission. (Idaho Const., art. 15, secs. 1 and 2; Farmers' Co-op. Ditch Co. v. Riverside Irr. Dist., 14 Idaho 450, 94 P. 761; Wilterding v. Green, 4 Idaho 773, 45 P. 134; Shelby v. Farmers' Co-op. Ditch Co., 10 Idaho 723, 80 P. 222; Speer v. Stephenson, 16 Idaho 707, 102 P. 365; Parrott v. Twin Salmon River Falls Co., 32 Idaho 759, 188 P. 451; Idaho Fruit & Land Co. v. Great Western Co., 17 Idaho 273, 105 P. 562; Brose v. Board of Directors, 20 Idaho 281, 118 P. 504; Hobbs v. Twin Falls Canal Co., 24 Idaho 380, 133 P. 899; Childs v. Neitzel, 26 Idaho 116, 141 P. 77; Adams County v. Twin Falls-Oakley Land & W. Co., 29 Idaho 357, 161 P. 322.)

The contract set up as exhibit "A" in intervenor Koelsch's complaint is not a deed; it contains no words of conveyance. (6 R. C. L., p. 842, sec. 232; Brose v. Boise City Ry. etc. Co., 5 Idaho 694, 51 P. 753; Devlin on Deeds, 1010; Brandon v. Leddy, 67 Cal. 43, 7 P. 33; Josslyn v. Daly, 15 Idaho 137, 96 P. 568; Chism v. Schipper, 51 N.J.L. 1, 14 Am. St. 668, 16 A. 316, 2 L. R. A. 544; Atwood v. Cobb, 16 Pick. (Mass.) 227, 26 Am. Dec. 657; Rosen v. Rosen, 159 Mich. 72, 134 Am. St. 712, 123 N.W. 559; Liggett v. Levy, 233 Mo. 590, Ann. Cas. 1912C, 70, 136 S.W. 299.)

The appropriation of water carried in the ditch of the appellant company for sale, rental and distribution does not belong to the water user, but to the appellant company. The right to the use of such water after having "once been sold, rented or distributed to any person for agricultural purposes" becomes a perpetual right subject to defeat only by failure to pay annual water rents and comply with the lawful requirements as to the conditions of the use. (Farmers' Co-op. Ditch Co. v. Riverside Irr. Dist., supra.)

The order of the commission fixing rates is unlawful, in that its schedule No. 1-B makes exception of this company's services as between the Krall additions and property within the boundaries of the former Krall ranch and other properties, and thus grants a preference or advantage to persons within the boundaries of said Krall ranch. (C. S., sec. 2427; Louisville & N. R. Co. v. Mottley, 219 U.S. 467, 31 S.Ct. 265, 55 L.Ed. 297, 34 L. R. A., N. S., 671; City of Pocatello v. Murray, 21 Idaho 180, 120 P. 812.)

The state may at any time exercise its inherent power to regulate rates charged by a public utility, and when this power is in exercise, private contract rights must yield. (Law v. Railroad Commission of California, 184 Cal. 737, 14 A. L. R. 249, 195 P. 423; Producers Trans. Co. v. Railroad Com., 251 U.S. 228, 40 S.Ct. 131, 64 L.Ed. 239; Sandpoint Water & Light Co. v. City of Sandpoint, 31 Idaho 498, 173 P. 972, L. R. A. 1918F, 1106; Union Dry Goods Co. v. Georgia Public Service Com., 248 U.S. 372, 39 S.Ct. 117, 9 A. L. R. 1420, 63 L.Ed. 309; Raymond Lbr. Co. v. Raymond Light & Water Co., 92 Wash. 330, 159 P. 133, L. R. A. 1917C, 574.)

The commission erred when it refused to consider and fix a value of the company's water right as an element of its property further than the mere allowance of a nominal sum expended for its acquirement. (Murray v. Public Utility Com., 27 Idaho 603, 150 P. 47, L. R. A. 1916F, 756; San Joaquin & Kings River Canal & Irr. Co. v. Stanislaus County, 233 U.S. 454, 34 S.Ct. 652, 58 L.Ed. 1041; Hard v. Boise City Irr. Co., 9 Idaho 589, 76 P. 331, 65 L. R. A. 407.)

The commission did not value the appellant's property as of the date of the inquiry, and failed to recognize and give fair consideration to reproduction costs and resultant value as of the date of the inquiry. (Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 47 L.Ed. 819; Willcox v. Consolidated Gas Co., 212 U.S. 19, 15 Ann. Cas. 1034, 29 S.Ct. 192, 53 L.Ed. 382; Monroe Gas Light & Fuel Co. v. Michigan P. U. Com., 292 F. 139; Bluefield Water Works & Improvement Co. v. Public Utilities Com., 262 U.S. 679, 43 S.Ct. 675, 67 L.Ed. 1176; Georgia Ry. & Power Co. v. Railway Com. of Georgia, 262 U.S. 625, 43 S.Ct. 680, 67 L.Ed. 1144; Boise Artesian Water Co. v. Public Utilities Com., 40 Idaho 690, 236 P. 525.)

The commission erred in refusing to make an allowance for working capital. (Ohio Utilities Co. v. Public Utilities Com., 267 U.S. 359, 45 S.Ct. 259, 69 L.Ed. 656.)

No allowance was made for going concern value, and such a value exists in appellant's property. (Boise Artesian Water Co. v. Public Utilities Com., supra; Denver Union Water Co. v. Denver, 246 U.S. 178, 38 S.Ct. 278, 62 L.Ed. 649.)

J. J. McCue and C. S. Hunter, for Respondent Boise City.

The commission's orders Nos. 940 and 943 are a sufficient compliance with the statutes governing the making of findings of fact in writing upon all matters concerning which evidence shall have been introduced before it which, in its judgment, have bearing on the value of the property of the public utility affected. (C. S., secs. 2472, 2514.)

The appropriation of water by the company is entitled to protection as a property right used in connection with its other property in the public service, but no value for ratemaking purposes other than costs actually expended in its acquirement should be allowed. (Van Dyke v. Geary, 218 F. 111; Pioneer Irr. Dist. v. County Commrs., 236 F. 790; Reno Power, Light & Water Co. v. Public Service Corp., 300 F. 645; Farmers' Co-op. Ditch Co. v. Riverside Irr. Dist., 16 Idaho 525, 539, 102 P 481; Wilterding v. Green, 4 Idaho 773, 45 P. 134; Hard v. Boise City Irr. & L. Co., 9 Idaho 589, 76 P. 331, 65 L. R. A. 407; 1 Spurr on Guiding Principles of Public Service Regulation, p. 479; Peterson v. Washington W. P....