City of Madison v. Madison Gas & Elec. Co.

• Decision Date: 21 June 1906
• Citation: 108 N.W. 65,129 Wis. 249
• Court: Wisconsin Supreme Court
• Parties: CITY OF MADISON ET AL. v. MADISON GAS & ELECTRIC CO. ET AL.

129 Wis. 249

108 N.W. 65

CITY OF MADISON ET AL.

v.MADISON GAS & ELECTRIC CO. ET AL.^a1

Supreme Court of Wisconsin.

June 21, 1906.

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

Bill by the city of Madison and others, against the Madison Gas & Electric Company and others. From an order denying defendants' motion for a stay of further proceedings on an application for an examination of defendants' books, papers, etc., before trial, in order to enable complainants to frame a complaint, and denying defendants' motion for a dismissal of the action, they appeal. Reversed and remanded.

This is an appeal from an order. The action was commenced by the service of a summons. At the same time there was served an affidavit of plaintiffs' attorney, a notice, under section 4096, Rev. St. 1898, of examination of some of the defendants personally and as officers of the defendant Madison Gas & Electric Company, and also a subpœna duces tecum, requiring the production by the gas company of its books and the records pertaining to its organization, indebtedness, and cost of plant, and generally as to the costs and disbursements incident to the conduct of the business. It is averred that the action is instituted to enjoin the defendant from exacting from the plaintiff, the city of Madison, and all its customers, for gas and electricity used by them, unreasonable and excessive rates; and to compel it to furnish such customers in the future, gas and electricity, of good quality and at reasonable rates, without unjust discriminations. The relief sought is in no way to affect the rates at which gas and electricity is to be furnished the city during the period of the existing contract between it and the gas company. The facts presented show that the defendant is a corporation organized under the name of the Madison Gas & Electric Company (for brevity it will herein be referred to as the gas company); that it is the owner of the rights and privileges granted by the Legislature of this state, and the common council of the city of Madison, to conduct the business of supplying gas and electricity to the city of Madison and its inhabitants; that it is the only company conducting such a business within the city, and is supplying the city and its inhabitants with these commodities at rates established by it; that no rates have been prescribed under its charter or otherwise, by the city or the state; and that it has placed gas pipes, posts, and electric poles and wires within and upon the public streets of the city. The object of the examination of these parties is to enable plaintiffs to frame their complaint, and to that end discovery is sought, among other things, as to what amount has been actually paid in and invested by the gas company to acquire, build, and maintain its present plant, the amounts, time of payment and when made, in detail; the amount of bonds issued by it, when and by whom purchased, with amounts actually paid by the purchasers, and the disposition of the moneys received for bonds; the actual indebtedness of the company, when, for what, and how contracted; the disposition of moneys realized on loans; its annual operating expenses and annual gross receipts; its schedule of rates charged for the commodities it supplies to its customers; and whether it is a member or partner of any combination or trust, and full information of such condition and relation, if it exist. The defendant obtained an order to show cause why the proceeding before the court commissioner for such examination should not be perpetually stayed and the action dismissed. The facts and circumstances alleged by the defendant for such relief were that the plaintiff, the city of Madison, had no interest in the action; that it has agreed to indemnify the individual plaintiffs (who are the real parties in interest, and who are prosecuting the action) for their costs and expenses; and that the undisputed facts and circumstances, upon which plaintiffs rely, furnish no grounds in law for the equitable relief sought to be enforced. The motion was heard upon the affidavit, notice of examination, subpœna duces tecum, served and filed, and the papers and proceedings in the action. Upon a hearing the court entered an order denying the motion of defendants for a stay of any further proceedings for such examination of the parties and for dismissal of the action. This is an appeal from such order.Olin & Butler, for appellants.

A. C. Hoppmann, Bird, Gilman & Hobbins, and John A. Aylward, City Atty., for respondents.

SIEBECKER, J. (after stating the facts).

The nature and the purpose of this action must be determined from the facts shown in the affidavit filed, under section 4096, Rev. St. 1898, in the proceeding for the examination of the parties before trial. This examination is demanded for the purpose of enabling plaintiffs to frame their complaint. The affidavit states the general nature and objects of the action, as well as the points upon which discovery is desired. It appears that the action is planted in equity, and is one seeking to enjoin the gas company and its officers and agents from demanding or exacting from its customers unreasonable and excessive rates for gas to be furnished to them, to compel it to furnish a good quality and a sufficient quantity of its commodities at reasonable rates, without unjust discrimination, and to establish a uniform schedule of prices for them. There is no dispute as to the nature of the business conducted by the gas company, and there is no dispute but that it has acquired rights and privileges to conduct the business of furnishing gas and electricity to the city of Madison and its inhabitants, and that it may, for this purpose, occupy the streets and alleys of the city with pipes and poles, electric wires, and such other appliances as are appropriate and necessary for the maintenance and conduct of its enterprise. From the nature and object of the action, and the relief demanded, it is obvious that plaintiffs are prosecuting it as one in equity to restrain the gas company from continuing to furnish these commodities to its customers at the prices it has charged, and is now charging for them, upon the ground that such charges are unreasonably high and are unauthorized by the franchise it exercises and result in an excess and abuse of the rights and privileges granted it, under which it devoted its property to a use in which the public have an interest.

The right to relief by injunction, to restrain acts in excess and abuse of corporate franchises and privileges, is recognized in the law and has been enforced by the courts of this state in appropriate cases. The presentation of the grounds of this jurisdiction contained in the opinion of Attorney General v. Railroad Companies, 35 Wis. 425, is so complete and sufficient that nothing additional can now be said on the subject. The remedy was therein applied in an action by the Attorney General, acting for the state, to restrain the railroad companies from exacting tolls for the carriage of passengers and freight in excess of the maximum rates established by acts of the Legislature. It is there stated: “The equitable jurisdiction precludes the objection that there is an adequate remedy at law. It admits the remedy at law, but administers its own remedy in preference, when the state seeks it in preference. It seems to proceed on the presumption that it may better serve the public interest to restrain a corporation, than to punish it by penal remedies or to forfeit its charter, and that, in that view, the proper officers of the state should have an election of remedies.” Page 524 of 35 Wis. The following cases are cited in addition to those cited by the court in its opinion: Commonwealth v. Pittsburgh & Connellsville Railroad Company, 24 Pa. 159, 62 Am. Dec. 372;Attorney General v. Jamaica Pond Aqueduct Corporation, 133 Mass. 361;Stockton v. Central Railway Company of New Jersey et al., 50 N. J. Eq. 52, 24 Atl. 964, 17 L. R. A. 97; 5 Pomeroy's Equity Jurisprudence (Eq. Rem.) § 302, and cases cited in notes. The court also asserts that “the custom of courts of equity to interfere in such cases, at the suit of private parties, for private injuries, is quite old,” and that “it seems to have grown up out of the ancient jurisdiction to restrain waste and nuisance,” and declares that the jurisdiction in favor of both the public and private persons is well established, “one on behalf of the state, for public wrong, and the other on behalf of private persons, for private wrong, arising from an excess or abuse of corporate franchises.” Pages 528 and 529 of 35 Wis. The equitable jurisdiction “of private suits to restrain private wrongs arising from” such excess or abuse of corporate powers, which was then recognized as firmly established by both the English and American cases, has been so extensively applied that it cannot now be regarded as open to question. Among specific applications of the jurisdiction to cases pertaining to acts of corporations engaged in the business of furnishing gas and electricity to a city and its inhabitants, are the following: Gaslight Co. v. Zanesville, 47 Ohio St. 35, 23 N. E. 60. This was an action by the city, in its proprietary capacity, to enforce its right to have gas furnished by the gas company in compliance with the terms of an ordinance prescribing fixed rates. The case of Muncie Natural Gas Company v. City of Muncie, 160 Ind. 97, 66 N. E. 436, was an action in equity by the city against the gas company to enforce obedience to an ordinance prescribing the rates and the conditions upon which gas was to be furnished to the inhabitants of the city. In Louisville Gas Co. v. Dulaney & Alexander, 100 Ky. 405, 38 S. W. 703, 36 L. R. A. 125, equitable relief by injunction was awarded to prevent a threatened violation of franchise obligations by way of overcharges for gas. Among other cases wherein equity has exercised...