Chippewa Power Co. v. R.R. Comm'n of Wis.

• Decision Date: 17 November 1925
• Parties: CHIPPEWA POWER CO. v. RAILROAD COMMISSION OF WISCONSIN ET AL.
• Court: Wisconsin Supreme Court

188 Wis. 246

205 N.W. 900

CHIPPEWA POWER CO.

v.RAILROAD COMMISSION OF WISCONSIN ET AL.

Supreme Court of Wisconsin.

Nov. 17, 1925.

Appeal from Circuit Court, Dane County; E. Ray Stevens, Judge.

Suit by the Chippewa Power Company against the Railroad Commission of Wisconsin and others. From an order overruling demurrer to plaintiff's complaint, defendants appeal. Affirmed.

The complaint, among other things, alleges that plaintiff is a corporation organized “to acquire, own, develop, operate, manage, control, lease or sell developed and undeveloped water power sites on the Chippewa river and its tributaries”; that it is not by its articles of organization authorized to be a public utility; that it is the assignee of certain rights granted to individuals by chapter 172 of the Laws of Wisconsin for the year 1903, to construct and maintain a dam across the Chippewariver, at a point commonly known as Jim Falls, together with necessary structures, appendages, and improvements; that pursuant to such authority it did heretofore construct said dam, and also an electric transmission line to a point on said Chippewa river known as Wissota, at which point there existed and still exists a dam, constructed and owned by the Wisconsin-Minnesota Light & Power Company, a Wisconsin public utility corporation; that prior to the construction of said dam and transmission line, the plaintiff entered into an agreement with the said light and power company, by the terms of which plaintiff leased said dam to be constructed, and the machinery to be installed and used in connection therewith, together with said transmission line, to said light and power company, for a term of 30 years, at an agreed annual cash rental, with an option to the lessee to purchase the leased property at a fixed price; that the lessee took possession of said property under the lease, and is now operating the same for the purpose of developing hydraulic energy for the use of the lessee in the distribution of light and power to the public; that the income from said lease is plaintiff's sole income, and that such income is used to pay the interest on certain mortgage bonds executed by it, interest on certain preferred stock, and a reasonable return to the holders of the common stock; that subsequent to the construction of said dam and transmission line, and to the issuance of the bonds and stocks above referred to, the defendants, in disregard of the rights of the plaintiff, purporting to be acting under authority of law, issued a notice of investigation for the purpose of determining whether or not the terms of said lease and the rental reserved therein are reasonable; that the plaintiff appeared at such meeting and objected to the jurisdiction of the defendants to approve or disapprove said lease and to make any order in such proceeding as to the reasonableness of said rental, or any order whatever respecting the plaintiff; that notwithstanding the objections so raised by the plaintiff at said hearing, the defendants proceeded in their investigation; that it is the object of the defendants to make a finding that the rental provided for by the lease is grossly excessive, and that it should be reduced by a large sum; that such proceeding on the part of the commission, unless restrained, will work irreparable injury to the plaintiff, and that it will subject the latter to the trouble and large expense of litigation; that it will impair the value of its property and the securities issued by it; and that unless the injunction issue, it will be subjected to the payment of penalties and forfeitures, etc.

The defendants demurred on three grounds, but on the hearing in the court below, and on this appeal, but one ground was argued, namely, that the complaint does not state facts sufficient to constitute a cause of action. This demurrer was overruled by the circuit court, and from the order overruling such demurrer the defendants have taken this appeal.

H. L. Ekern, Atty. Gen., and C. A. Erikson, Deputy Atty. Gen., for appellants.

Schubring, Ryan, Clarke & Petersen, of Madison, for respondent.

DOERFLER, J. (after stating the facts as above).

At the very threshold of the issues raised in this case lies the question whether the plaintiff is a public utility, so as to empower the defendants to act in the premises with respect to the terms and conditions of the lease, as far as the plaintiff is concerned. This issue therefore resolves itself into one of jurisdiction. The material portion of section 196.01 of the Statutes reads as follows:

“The term ‘public utility’ as used in sections 196.01 to 197.10, inclusive, shall mean and embrace every corporation, company, individual, association of individuals, their lessees, trustees, or receivers appointed by any court whatsoever, and every town, village, or city that now or hereafter may own, operate, manage, or control any plant or equipment or any part of a plant or equipment within the state, for the conveyance of telephone messages or for the production, transmission, delivery, or furnishing of heat, light, water, or power either directly or indirectly to or for the public. * * *”

Defendants in their brief say:

“The statute is so clear and unambiguous that it seems almost unnecessary to cite authority in support of the appellants' position.”

It must be conceded that the language used in this statute is exceedingly broad and comprehensive, as was said in the case of Calumet Service Co. v. Chilton, 148 Wis. 334, 135 N. W. 131, and that such language, when given a literal interpretation, may be held to be sufficiently broad and comprehensive to include a corporation like the plaintiff, under the facts and circumstances appearing from the complaint. While it must be and is admitted by defendants' counsel that the plaintiff is not directly engaged in furnishing light, heat, or power to the public, nevertheless they contend that it is clearly engaged in indirectly furnishing light, heat, and power to the public, and that, being the owner of the property leased to the light and power company (a conceded public utility), it clearly comes within the purview of the statute referred to. It is also conceded by defendants that if the plaintiff had devoted its property to some manufacturing or some other private use, it could not be deemed a public utility, and would not be subject to regulation by the defendants.

It is quite evident that the Legislature, in the use of the word “indirectly” in the statute, did not intend to cover a situation such as is presented in this case, but that it aimed at including all corporations under the definition of a “public utility” which, under the guise of a private utility, nevertheless in fact were functioning as a public utility. The plaintiff, while the owner of the property and of the plant, has parted with its possession of the same to the lessee, under the lease. As long as the lessee performs the covenants and conditions of the lease, it is, to all intents and purposes, the owner of such plant for a period of 30 years. The plaintiff produces no light, heat, or power for either the public or an individual, and at no time has done so. It sells no light, heat, or power to any one. It is not interested, directly or indirectly, in the sale of any light, heat, or power to the public; that being a matter in which the light and power company alone is interested. It is not authorized under its articles of incorporation as a public utility, and, as assignee of the rights originally granted certain individuals by chapter 172 of the Laws of Wisconsin for the year 1903, it obtained no such rights, and assumed none, as these individuals were merely authorized to maintain a dam across the Chippewa river for the purpose of milling, manufacturing, and for hydraulic purposes.

What basis is there, then, for claiming that the plaintiff is a public utility? If the plaintiff, under the facts in this case, be deemed a public utility, then the definition of a public utility has been broadened to an extent heretofore undreamed of. An owner of an office building who leases the whole or a part thereof to a public utility would thereby be embraced within the definition of a public utility, and his lease would be subjected to regulation of the Railroad Commission. The owners of patented devices leased to telephone companies would also come within the definition of the term “public utility,” and their leases, which are purely private contracts, would be subjected to regulation by the commission. Other illustrations could be readily furnished, but the foregoing, which are among those specified and set forth in the brief of the learned counsel for the plaintiff, are sufficient to demonstrate the general drift of where we would ultimately land if the facts in this case were deemed sufficient to warrant our holding that the plaintiff is a public utility. A line or distinction must definitely be drawn somewhere, and unless this be done, the constitutional provisions pertaining to the ownership, control, and management of private property will be completely submerged. Such a doctrine would be revolutionary, to say the least.

[1] The chapter of our statutes creating the Railroad Commission and defining its powers, duties, and obligations, and particularly section 196.01 of the Statutes, “must receive a construction that will effectuate the evident intent of the Legislature,” as was held in the case of Cawker v. Meyer, 147 Wis. 320, 324, 133 N. W. 157, 158 (L. R. A. [N. S.] 510), and the predominant and evident intent was to secure “the best service practicable at reasonable cost to consumers in all cases.” Calumet Service Co. v. Chilton, 148 Wis. 334, 363, 135 N. W. 131, 142.

Originally, corporations which were in fact public service corporations contended that they were not subject to control as to the service which they gave the public, or the rates which they charged. However, valuable privileges had been...