Lake Superior Dist. Power Co. v. Pub. Serv. Comm'n

• Decision Date: 25 February 1947
• Citation: 26 N.W.2d 278,250 Wis. 39
• Parties: LAKE SUPERIOR DIST. POWER CO. v. PUBLIC SERVICE COMMISSION.
• Court: Wisconsin Supreme Court

250 Wis. 39

26 N.W.2d 278

LAKE SUPERIOR DIST. POWER CO.

v.PUBLIC SERVICE COMMISSION.

Supreme Court of Wisconsin.

Feb. 25, 1947.

Appeals from a judgment and orders of the Circuit Court for Dane County; Alvin C. Reis, Judge.

Judgment and orders affirmed.

In a proceeding instituted by the Lake Superior District Power Company (a public service corporation hereinafter called the ‘Utility’) under the Uniform Administrative Procedure Act, secs. 227.01-227.21, Stats., the Utility sought judicial review of a declaratory ruling made by the Public Service Commission. It made that ruling in a proceeding initiated by the Utility's petition for a declaratory ruling under sec. 227.06, Stats., as to whether a fee of $1 on each $1000 par value of stock was payable under sec. 184.10(1), Stats., on the Commission's approval of the Utility's application of its proposal to divide each of its outstanding shares of $75 par value common stock into 3 3/4 shares of $20 par value common stock. Theretofore the Commission had ruled such a fee was payable before its certificate could issue authorizing the Utility's proposed split-up of its outstanding shares of common stock, but in so ruling the commission stated expressly it was ‘without prejudice to formal determination of the question involved by declaratory ruling.’ Upon the Commission's final determination of that question by the declaratory ruling, as stated above, the Utility, within the period allowed by sec. 227.16(1), Stats., for instituting proceedings for judicial review of the Commission's rulings, served on the latter an instrument entitled ‘Notice of Appeal’ to the circuit court from the Commission's declaratory ruling. While the proceeding for the Commission's final declaratory ruling was pending, a bank draft for $2670 was deposited with or paid to the Commission under protest by the Utility because, as it stated in a letter attached to the draft, such deposit or payment was required by the Commission to be made before it would issue its certificate to the Utility authorizing the proposed split-up of its stock. The Commission duly acknowledged in writing receipt of the letter and the attached draft deposited or paid under protest, as stated in the letter. In the proceedings instituted by the Utility's ‘Notice of Appeal’ to the circuit court, the latter ordered the Commission to show cause why it should not be enjoined from delivering that draft to the state treasurer, and the court also enjoined the Commission pendente lite from transmitting the draft to the state treasurer. Subsequently, after a hearing on the merits, the court entered a judgment reversing the Commission's final declaratory ruling, which required the payment of the fee in question, and further modified said ruling so as to provide, in connection with other matters, that no such fee was payable under sec. 184.10(1), Stats., by the Utility on its proposed split-up of its outstanding shares of common stock. The Commission appealed from that judgment and also from other orders entered in the course of the proceedings.John E. Martin, Atty. Gen., Harold H. Persons, Ast. Atty. Gen., and H. T. Ferguson, Chief Counsel, of Madison, for appellant.

Aberg, Bell, Blake & Conrad and Glen H. Bell, all of Madison, for respondent.

FRITZ, Justice.

In this opinion the appellant, Public Service Commission, is called the ‘Commission and the Lake Superior District Power Company is called the ‘Utility.’ The principal question on this appeal is raised by the Commission's contention that the court (1) erred in adjudging the reversal of the Commission's declaratory ruling that the provisions of sec. 184.10(1), Stats., which required a fee to be paid in connection with a public service corporation's application to the Commission for approval of the issuance of its securities are applicable to a transaction proposed by the Utility in relation to its shares of stock; and (2) likewise erred in adjudging the amendment of said declaratory ruling to read that,

‘The split-up of the outstanding common stock of’ the Utility from shares having a par value of $75 each into shares having a par value of $20 each, with no change in the total par value amount of common stock outstanding, which split-up was approved in a proceeding by the Commission ‘did not constitute an issuance of securities subject to the fees or taxes provided in Section 184.10(1), Wisconsin Statutes, even though such split-up of common stock resulted in changing the voting rights and consequent power of control of the business and affairs of Lake Superior District Power Company, as previously vested in the common and the preferred stockholders as groups. The changes in the rights of the preferred stockholders or in the characteristics of the preferred stock which changes were approved by the Public Service Commission * * * did not constitute an issuance of securities subject to the fees or taxes provided in Section 184.10(1), Wisconsin Statutes. No fee or tax was, or is payable under Section 184.10(1)’, Stats., by the Utility ‘in connection with the application filed by that company with the Public Service Commission of Wisconsin for approval of the transactions proposed in, and approved by such commission * * *.’

Sec. 184.10(1), Stats., provides:

‘Each public service corporation on filing an application for authority to issue any securities to which this chapter is applicable shall pay with such application, prior to the issuance of a certificate, a fee of one dollar per thousand for each thousand dollars par value of each authorized issue of securities, but in no case less than ten dollars for any issue.’

The Commission claims that the fee of $2670, which it demanded under that statute as a condition for the Utility obtaining the Commission's approval of the Utility's proposed reclassification of its shares of common stock was proper because the exchange of its shares for the proposed new shares at different par value per share, but for the same total par value-in connection with the amendment of the Utility's articles of incorporation so as to (1) give its common stockholders pre-emptive rights to purchase future issues of common stock; (2) increase from 1/2 to 2/3 the affirmative vote required of the preferred stockholders to permit the Utility to do certain acts; (3) reduce the amount of unsecured indebtedness which it might incur without the specific consent of the preferred stockholders; and (4) reduce the time in which preferred stockholders might control the board of directors in the event of defaults in the payment of preferred stock dividends,-constitutes the shares which are to be received by stockholders in such exchange, a separate and additional issue of securities, which is therefore subject to the $1.00 fee per $1000 prescribed by sec. 184.10(1), Stats.

On the other hand the Utility contends (1) that fee is to be paid only on an initial issue of capital stock; (2) that no such fee is payable by a public service corporation on a reclassification-as in this case-of its shares of common stock by having its stockholders exchange and receive in place of their proportionate holders of its entire issue of 35,600 shares of common stock of $75 par value, amounting in the aggregate to $2,670,000, 133,500 shares of $20 par value, amounting in the aggregate likewise to $2,670,000, which is the amount of the common stock it had been and still continued to be authorized to issue; and (3) that the exchange of shares of stock thus received by the stockholders does not result in any increase in the total amount authorized to be issued, nor does it constitute a new or additional issue of capital stock, because of which it can be considered the ‘issue of securities', within the meaning of that term as used in sec. 184.10(1), Stats.

In considering those contentions and claims of the respective parties, it is important to note the history of the provisions in Ch. 184, in relation to the fee imposed on ‘each authorized issue of securities.’ In the Statutes of 1925, sec. 184.09 provided that no public service corporation should ‘issue any stocks, certificates of stock, bonds, notes, or any other evidences of indebtedness' until it first obtained authority from the Commission, and sec. 184.21 imposed a fee only upon the issuance of ‘bonds, notes, or any other evidences of indebtedness'; but no fee was imposed upon the issuance of any stocks or certificates of stock. By Ch. 534, L. 1927, security or securities was defined in sec. 184.01, Stats., to ‘mean and include every share of stock, certificate of stock, bond, note or other evidence of debt issued by a public service corporation’; and sec. 184.09 was amended to refer only to ‘securities' without specifying the various types; and there were some verbal changes in the fee provisions in sec. 184.21, but payment of fees, which was required to be paid thereby, was still confined to the issue of ‘evidences of * * * debt’. Stock issues were wtill not subject to any fee payment. In 1931 the definition of securities in Ch. 184 was amended to read-and still reads in sec. 184.01(3)-“Securities' means capital stock and evidences of indebtedness of a public service corporation * * *'; and in 1931, sec. 184.21, which since 1925 imposed the fee upon the issuance of ‘bonds, notes, or other evidences of indebtedness', was renumbered as sec. 184.10(1) and made applicable to the ‘issue of securities.’ Thus it is evident that it was never intended to impose the payment of a fee upon the mere certificates of stock. During the time separate shares of stock and certificates therefor were referred to in Ch. 184 the fee imposed by any provisions therein was limited to bonds and other evidences of indebtedness. The fee was not made to apply to the issuance of securities generally until the definition of securities was changed to eliminate individual shares of stock, so that now the fee is imposed solely upon the issuance of...