Cucamonga County Water Dist. v. Southwest Water Co.

• Decision Date: 21 December 1971
• Citation: 22 Cal.App.3d 245,99 Cal.Rptr. 557
• Court: California Court of Appeals Court of Appeals
• Parties: , 3 ERC 2007 CUCAMONGA COUNTY WATER DISTRICT, Plaintiff and Appellant, v. SOUTHWEST WATER COMPANY, a corporation, and Rochester Water Company, a corporation, Defendants and Respondents. Civ. 10026.

Page 557

99 Cal.Rptr. 557

22 Cal.App.3d 245, 3 ERC 2007

CUCAMONGA COUNTY WATER DISTRICT, Plaintiff and Appellant, v. SOUTHWEST WATER COMPANY, a corporation, and Rochester Water Company, a corporation, Defendants and Respondents.

Civ. 10026.

Court of Appeal, Fourth District, Division 2, California.

Dec. 21, 1971.

As Modified on Denial of Rehearing Jan. 18, 1972.

[22 Cal.App.3d 251] Rutan & Tucker, Milford W. Dahl, and Homer L. McCormick, Jr., Santa Ana, for plaintiff and appellant.

Howard M. Downs, Stuart R. Pollak, Malcolm E. Wheeler, and Howard, Prim, Smith, Rice & Downs, San Francisco, for defendants and respondents.

Brobeck, Phleger & Harrison, and Robert N. Lowry, San Francisco, for California Water Assn., amicus curiae, in support of defendants and respondents.

OPINION

GABBERT, Associate Justice.

Appellant (plaintiff below) is the Cucamonga County Water District, a public entity formed under the County Water District Law. Respondents are the Southwest Water Company, a privately owned public utility water company, and Rochester Water Company, a mutual water company.

In 1957 Southwest received a certificate of public convenience and necessity to provide water service in the lightly populated Etiwanda area, located between the city of Fontana and the cities of Upland and Ontario in western San Bernardino County. It lies in country sloping gently southward from the base of the San Gabriel Mountains.

Rochester since the turn of the century has provided water service to a narrow north-south strip of land in the Etiwanda area. Water is collected from tunnels driven into the walls of canyons in the mountains, and after being received into a reservoir flows southward to the service connections scattered along the four mile line of Rochester Avenue. Water pumped from a leased well supplements the mountain supply.

As part of the plan of Southwest to provide water service to this area, and at about the same time it received its certificate of public convenience and necessity therefor, Southwest acquired virtually all the shares of stock in Rochester for $92,000, half in cash and half in Southwest shares. After acquisition of the Rochester shares, Southwest took over distribution of water to the 23 Rochester domestic services and made some improvements in the Rochester collection and distribution facilities. Southwest also proceeded to develop its own water service facilities, mostly in the northern portion of the certificated area, north and east of Rochester Avenue. By the time this proceeding had commenced, connections to the Rochester system had increased to 50 plus services.

The District annexed a part of the Southwest certificated area, which included virtually all the Rochester lines downstream from the reservoir and some Southwest lines. Having determined to install duplicating water service facilities in the annexed areas by means of a proposed Assessment District No. 5, the District commenced a proceeding to ascertain just compensation due Southwest and Rochester for any of its property employed in providing water service and made inoperative, reduced in value, or rendered useless because of the District's extensions. (Pub.Util.Code, §§ 1503, 1504.)

The parties concede that, prior to 1965, the District could have extended its water service facilities to duplicate those of Southwest and Rochester without paying compensation to Southwest or Rochester for such injuries. (Clark v. City of Los Angeles, 160 Cal. 30, 40, 116 P. 722; Madera Waterworks v. City of Madera, 228 U.S. 454, 456--457, 33 S.Ct. 571, 57 L.Ed. 915, 916.) In 1965, however, the Legislature added Chapter 8.5 to the Public Utilities Act, ¹ finding that the potential loss of value to privately owned public utilities and mutual water companies of water service facilities duplicated by political subdivision deters the extension of such privately owned facilities to provide essential water supply. The Legislature further found that public necessity required that compensation be paid by political subdivisions for damage attending the extension of duplicating facilities (Pub.Util.Code, §§ 1501, 1506), and that such extension constituted, Pro tanto, a taking of the affected property of the public utility. (§ 1503.)

The issue of the amount of just compensation was tried before a jury, and the District appeals from a judgment in favor of Rochester for $244,400, and in favor of Southwest for $40,000.

The opening brief of appellant District lists contentions on appeal under twelve general headings. However, the effective disposition of the case features the first and twelfth points of contention, namely the assertion by the District that Chapter 8.5 of the Public Utilities Act is unconstitutional, or alternatively, that, if compensation is to be paid under Chapter 8.5, the judgment should provide for the condemnation of the Rochester operating system to the use of the District. We set forth below the specifics of our decision that the statute passes the test of constitutionality, but that the District must prevail in its claim for title to Rochester's operating system.

The latter point will be considered first.

The judgment condemns to the use of the District all of the property of Southwest within proposed Improvement District No. 5. The judgment does not condemn any property of Rochester, providing merely that when the District has paid over $244,400, the District 'shall have paid all compensation due or payable to (Rochester) under the provisions of (Chapter 8.5 of the Public Utilities Act) by reason of (the District's) proposed construction.' As will be demonstrated, the judgment misreads the verdict of the jury.

Section 1504 provides, in part: 'Whenever the compensation by a political subdivision under this section is an amount equal to the just compensation value of all the property of the private utility in the operating system that the private utility employs in providing water service to the service area, the political subdivision may, by resolution, provide for the acquisition of all such property.'

A resolution of the District board of directors was set forth in the pleadings and put in evidence, which recited that, in the event the compensation required to be paid by the District is an amount equal to the just compensation value of all the property of the Rochester operating system employed in providing water service within proposed Assessment District No. 5, public interest and necessity require that such property be acquired for public use. The verdict of the jury was in two parts: In the first part the jury found that the fair market value of the property employed by Rochester in providing water service within proposed Assessment District No. 5 was $249,000; and in the second part the jury found that the damages suffered by Rochester as a result of being injured by reason of any of its property employed in providing water service being rendered inoperative, reduced in value or rendered useless was $244,400. When reference is made to the record, the proper construction of the verdict is that the proposed construction by the District rendered the Rochester system valueless, except for the incidental salvage of some removable items.

The theory relied on by Rochester at the trial was that the construction proposed by the District rendered the Rochester system valueless except for incidental salvage of some removable items. The values given by the District nowhere approach the amount of the verdict, and accordingly there is substantial evidence to support the values given in the verdict only if it is considered that the jury accepted as true Rochester's theory of the case. ² Turning to the evidence, Walker Hannon testified for Rochester that 'after the take' the water rights, facilities upstream of the reservoir, the reservoir, and downstream distribution lines would be worth nothing, and that the only value remaining would be the salvage of 'two pressure reducers' and 'eight four inch fire hydrants', worth an estimated $500. The second witness for Rochester was Thomas M. Stetson who testified that after the construction of the parallel system by the District, the only things of any value left to Rochester were 'about two hundred dollars worth of salvage for the chlorinator,' and three thousand dollars worth of salvage for 'some of the hydrants and main meters.'

The verdict should be liberally construed to uphold the judgment. (Clark v. McClurg, 215 Cal. 279, 285, 9 P.2d 505; Cal.Const. Art. VI, Section 13.) Although it falls to the trial judge to interpret the verdict from its language considered in connection with the pleadings, evidence, and instructions, where the trial court does not interpret the verdict or interprets it erroneously, an appellate court will interpret the verdict if it is possible to give a correct interpretation. (Woodcock v. Fontana Scaffolding & Equip. Co., 69 Cal.2d 452, 456--457, 72 Cal.Rptr. 217, 445 P.2d 881.)

From the foregoing, the proper construction to be given the verdict is that when Rochester is paid the $249,000 it will have received the just compensation value of all the property of the private utility in the operating system that the private utility employs in providing water service to the service area, and the District is entitled to have the Rochester system condemned to its use. The modified judgment will include payment for the items described by Rochester as 'salvage'; these items are a necessary part of the operating system, which is taken over by the District subject to all existing burdens of water service. (Erwin v. Gage Canal Co., 226 Cal.App.2d 189, 194, 37 Cal.Rptr. 901.)

It is, therefore, necessary to reverse and remand for the purpose of the preparation of new findings of fact, conclusions of law and a new judgment consistent with the opinion herein expressed. On remand the trial court shall modify the judgment to provide that the fair market value of the...