Kennebec Water Dist v. City of Waterville

• Decision Date: 27 December 1902
• Citation: 54 A. 6,97 Me. 185
• Parties: KENNEBEC WATER DIST v. CITY OF WATERVILLE et al.
• Court: Maine Supreme Court

54 A. 6

97 Me. 185

KENNEBEC WATER DIST

v. CITY OF WATERVILLE et al.

Supreme Judicial Court of Maine.

Dec. 27, 1902.

[Copyrighted material omitted]

(Official.)

Report from supreme judicial court, Kennebec county.

Action by the Kennebec water district against the city of Waterville and others. Case reported. Instructions to appraisers given.

On report. Instructions to appraisers given by the court to determine the valuation of property of the Maine Water Company, and acquired by the plaintiff by the exercise of the right of eminent domain.

In this court below, the parties, in accordance with the provisions of the act of the legislature authorizing the water district to take over the property, filed written requests for instructions which they desired, and contended ought to be given by the court to the appraisers, to guide them in determining the valuation of the property to be taken over. The case was then reported; the bill, answer, replication, and docket entries making part of the case, with a stipulation that all legislation of Maine relating to the Maine Water Company and the Waterville Water Company is to be referred to by either party in argument.

The Kennebec water district requested the court to instruct the appraisers as follows:

(1) The appraisers are directed to state separately in their report what part of the amount fixed by them as the valuation of the plant, property, and franchises of the Waterville Water Company and the Maine Water Company is fixed as the value of the plant and property, and what part is fixed as the value of the franchises, and further to state what property and what franchises they have considered in fixing these values.

(2) Upon the question of the value of the companies' plant and property, the actual cost of said plant and property, together with proper allowances for depreciation, is legal and competent evidence; and for the purpose of fixing this actual cost the companies are directed to produce before the appraisers all book accounts and documents containing entries which bear on the subject.

(3) Under no circumstances can the value of the plant of the companies be held to exceed the cost of producing at the present time a plant of equal capacity and modern design.

(4) The Waterville Water Company and the Maine Water Company are public service corporations, and, as such, have the right to charge reasonable rates only. What would be reasonable rates can be determined only after and by means of a valuation of the companies' property. Accordingly, the actual rates which may have been charged by the companies, and their actual earnings, have no bearing on the value either of the companies' plant or property, or of their franchises, and are immaterial.

(5) The selling value of the capital stock in the companies has no bearing on the valuation of the companies' plant, property, or franchises, and is immaterial.

(6) The quality of the water furnished by the companies, and of the service rendered by them, and the fitness of their plant to meet the reasonable requirements of consumers in the present and the future, are material questions in fixing the valuation of the companies' plant and property.

(7) The franchises of the Waterville Water Company are fixed by chapter 141, Priv. & Sp. Laws 1881, as amended by chapter 59, Priv. & Sp. Laws 1887, and chapter 14, Priv. & Sp. Laws 1891.

(8) The franchises of the Maine Water Company material to these proceedings are those of the Waterville Water Company, and those granted by Priv. & Sp. Laws 1893, c. 352, and no others.

(9) The appraisers shall regard the franchises of the companies as entitling them to continue business as a going concern, but subject to all proper legal rules governing public service companies; it being further understood that said franchises are in no way exclusive. The franchises shall not be otherwise appraised or valued.

(10) Upon the question of the value of the companies' franchises, the question of the fitness of the source of supply granted by these franchises with reference to the reasonable requirements of the consumers in the present and the future is material and competent.

(11) in fixing the value of the companies' franchises, the appraisers may give such regard as is demanded by ample and fair public policy to the past investment, risks, and services of the companies, and to the reasonably just expectations which those who made the investment had in mind when so investing, and also to the faithfulness or unfaithfulness shown by the companies in the performance of their public duty and obligation to furnish pure water at reasonable rates.

(12) Competent evidence may be received by the appraisers, tending to prove or refute the allegations contained in paragraph 13 of plaintiff's bill; and, in case said allegations are found to be true in whole or in part, said facts are to be considered as bearing on the value of the companies' franchises.

(13) Competent evidence may be received by the appraisers, tending to prove or refute the allegations contained in paragraph 14 of plaintiff's bill; and, iii case it is found that said companies have actually received more than reasonable rates for the services rendered since operations begun, then the amount of such excess shall be deducted from the amount to which the companies would otherwise be entitled.

(14) The appraisers may view the premises, so far as they see fit.

(15) They shall procure a stenographer to be in attendance, who shall take notes of all testimony, and furnish transcripts thereof.

(16) They shall make a report showing their doings and findings under each branch of the instructions above given, and also the date as of which the valuation was fixed.

The defendants requested the court to instruct the appraisers as follows:

(1) If the court shall be of the opinion that either party at this stage of the case is entitled to instructions under the eighth section of the act above mentioned, the defendants respectfully ask the court for the following instructions to said appraisers: the defendants understanding that preliminary requests for instructions are authorized by said eighth section, and that they will be asked for on the part of the plaintiff, and not deeming it right that requests should be presented and considered by the court on the one part, and not on the other.

(2) That by the terms of chapter 200 of the Private and Special Laws of 1809, every item of property within the limits of the Kennebec water district, and of the towns of Benton and Winslow, included in the water system of the Maine Water Company at the date selected for appraisal, or then used or usable in connection therewith, whether specifically enumerated in said act or not, together with all real estate within said district then held by said Maine Water Company, is to be taken from said water company, and every such item, and every valuable contract, right, privilege, or franchise exercised or capable of being exercised within the territory above named, must be considered and allowed for by the appraisers, separately or otherwise.

(3) That any increase of pecuniary obligation or burden or duty, or any damage to or impairment of the value of its remaining property or franchises, in any way resulting to said Maine Water Company by reason of the exercise of the right of eminent domain contemplated by said act of 1899, should be considered by said appraisers, and just compensation therefor should be included in their award.

(4) That the real estate or other outside property not directly connected with the water system, so far as included in the taking contemplated by this act, should be appraised at its fair market value, not at forced sale, but at what it is fairly worth to the seller, under conditions permitting a prudent and beneficial sale thereof.

(5) That as to the remaining property constituting the water system to be taken, and the franchises, rights, and privileges connected therewith, neither the total construction cost of the entire water system, measured at the date selected for valuation, nor such construction cost less wear and tear and depreciation, nor such construction cost, thus reduced, and afterwards increased by any adjudged percentage or bonus of profit thereon, can constitute the legal criterion of the total values to be awarded under the terms of this act.

(6) That neither can the reproduction cost thereof, at the date thus selected, either new or in its then condition, constitute the legal criterion of said total values.

(7) That the cost, at the date thus selected, of replacing said entire water system by a new one, differently constructed, but equal or even superior in efficiency to the one now existing, is not the legal criterion of said total values.

(8) That in order to determine even the structure value of said water system, and to award just compensation to said Maine Water Company therefor, under the terms of this act, a proper sum must be allowed by the appraisers, in their sound judgment, separately or otherwise, in addition to its value as otherwise established, for the fact, if proved, that such water system is not merely an aggregate of materials fitted for use, without actual business, service, connections, takers, or income, but a going concern, with a profitable business and good will already established, and with a present income assured and now being earned.

(9) That in determining the amount thus to be added to measure adequately even the structure value of said water system, the appraisers should consider, among other things, the present efficiency of said system, the length of time necessary to construct the same de novo, the time and cost needed, after construction, to develop such new system to the level of the present one in respect to business and income, and the added net incomes and profits, if any, which, by its acquirement as such going concern, would accrue to a purchaser during the...