Milwaukee Elec. Ry. & Light Co. v. City of Milwaukee

• Decision Date: 08 February 1921
• Citation: 181 N.W. 298,173 Wis. 329
• Court: Wisconsin Supreme Court
• Parties: MILWAUKEE ELECTRIC RY. & LIGHT CO. v. CITY OF MILWAUKEE.

173 Wis. 329

181 N.W. 298

MILWAUKEE ELECTRIC RY. & LIGHT CO.

v.CITY OF MILWAUKEE.

Supreme Court of Wisconsin.

Feb. 8, 1921.

Appeal from Circuit Court, Milwaukee County; Chester A. Fowler, Judge.

Action by the Milwaukee Electric Railway & Light Company against the City of Milwaukee. Judgment for plaintiff, and defendant appeals. Affirmed.

Two causes of action to recover for electric service furnished to the city of Milwaukee, or certain of its boards and departments, at rates of charge alleged to have been established therefor by the railroad commission of Wisconsin. Plaintiff company had judgment on both causes of action in the trial court, and defendant city brings this appeal from the whole of the judgment. The appeal is presented on the pleadings and the decision of the trial court without a bill of exceptions.

First Cause of Action.

The first cause of action is to recover for electrical energy furnished for the operation of four of the city's draw bridges. None of these particular bridges was occupied by any of the property of respondent company, yet it has been paid nothing for the service. This came about in the following way:

On the 21st of November, 1885, the Milwaukee common council passed an ordinance purporting to grant to the Badger Illuminating Company the right to maintain lines in the city's streets for furnishing electric current, and providing that the said company should not pool or assign its interests nor consolidate with any other electric light company which might thereafter obtain a “franchise” to do business in the city, and providing that upon pooling or consolidating without consent of the council the ordinance should be void. On October 7, 1889, a similar ordinance was passed for the Edison Electric Illuminating Company, prohibiting consolidation and the like with any other company which might theretofore or thereafter have obtained a “franchise.”

On December 1, 1890, the council passed an ordinance purporting to amend the two prior ordinances so as not to prohibit the consolidation of the two companies, upon condition that the consolidated company furnish the power necessary to turn certain named bridges, including the four bridges here involved, free of charge to the city, and providing that if the consolidated companies should fail to furnish such power it should be considered a forfeiture of all their “franchises.”

The two companies were consolidated, and respondent company thereafter became the owner of whatever rights the companies had by reason of these ordinances and has furnished the service required.

The railroad commission established a schedule of rates for electric power service furnished by respondent company in Milwaukee, which was effective during the period from December 1, 1912, to the time of bringing this action, and the action is to recover at these rates for the service rendered during this period; it being claimed by respondent company that the agreement to furnish the service free of charge was void in its inception, and that, in any case, it was relieved of the obligation by the passage of the “public utility” act and the “indeterminate permit” act and proceedings had thereunder.

The trial judge found the facts substantially as here summarized. He concluded that the rate fixed by the railroad commission was applicable to this service and that the respondent was entitled to recover.

Second Cause of Action.

The second cause of action is to recover for a balance claimed to be due and unpaid upon one month's charge for electric lighting in Lake Park, in the city of Milwaukee.

On August 3, 1916, respondent company entered into a written contract with the board of park commissioners of the city for the installation and operation of an electric lighting system in the park. The contract purported to be executed by the board acting for the city. By it the company agreed to install the system, furnish the current, and otherwise operate and maintain the system. The arrangement was to continue for an indeterminateperiod, terminable after two years upon six months' notice by the board. The rates of charge for the first year were fixed to cover three groups of costs; group A covering such costs as were incurred jointly by the park lighting and other public service, and groups B and C covering such costs as were incurred by the special facilities for the park lighting. It was provided that the charges should be subject to adjustment in consequence of change in any of the groups of costs, that group A should be subject to review under the public utility act, and that groups B and C should be revised annually according to the investment in the special equipment installed and the cost experience in operating it, respectively. Among the costs in group B was a charge of 4 per cent. per year upon the special investment for park lighting to “insure replacement (depreciation reserve),” to which reserve interest was to be credited semiannually at he rate of 4 per cent. upon the accumulated reserve, and from which the cost of special investment retired from the service was to be deducted from time to time. The sum of the A costs, as revised from time to time under the utility act, and the B and C costs, as revised annually, was to constitute the price payable in equal monthly installments during each contract year. It was further provided that upon the termination of the agreement at the election of the park board, as therein provided, it would pay to the company the difference between the special investment in park lighting equipment and the accumulated depreciation reserve at the date of termination, and that the title to the special equipment should thereupon be acquired by the board.

The agreement was entered into without calling for bids and was executed by the park board without being countersigned by the comptroller or approved by the city attorney as to form and execution. A lighting system was constructed, and during October, 1918, was operated by current furnished in accordance with this agreement, and the service was accepted and received by appellant city.

On September 14, 1918, the railroad commission entered an order increasing the rates for park lighting by adding a surcharge to the group A of costs mentioned, and this cause of action is to recover the difference between the amount paid and the full charge as thus increased for the month of October, 1918, the first month in which the increase was operative. In refusing to pay this amount the city contends that the contract of August 3, 1916, is invalid.

The trial court concluded that the rates fixed in the contract of 1916 as modified by the order of the railroad commission were the lawful rate of charge for the park lighting service, that the utility act forbade furnishing or receiving the service at any other rate, and that regardless of the validity of the contract, a matter not decided by him, the respondent was entitled to recover the quantum meruit at the rate fixed by the commission.

Clifton Williams, City Atty., and Walter J. Mattison, Asst. City Atty., both of Milwaukee, for appellant.

Van Dyke, Shaw, Muskat & Van Dyke, of Milwaukee, for respondent.

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

In these two causes of action counsel on both sides attack agreements between the city and the electric company as invalid and unconstitutional. In the first cause of action counsel for the company allege that certain portions of the ordinances involved were wholly unauthorized. Counsel for the city argue that even if this were true the company is estopped from raising the question. In the second cause of action counsel for the city allege that the contract was wholly void, and counsel for the company reply that the city is in no situation to make such a claim. It might not be easy to reconcile these apparent inconsistencies, but neither lawyers nor statesmen are held to any very rigid rule of consistency; even the courts have been known to depart from it.

Although the validity of portions of the ordinances set forth in the statement of facts was ably and elaborately discussed by counsel on both sides, it was not passed upon by the trial judge, and on account of the view we take of another branch of the case it does not seem necessary to indulge in as full discussion of the ordinances involved as might otherwise be necessary.

Counsel on both sides are agreed that the ordinances of 1885, 1889, and 1890 were not franchises but were mere licenses, and that there was then no statutory authority in cities to grant franchises to electric companies. Chapter 192, Laws of 1893 (section 1780b, Stats. 1898), did give authority to such companies “with the consent of and in the manner agreed upon with the authorities of any city or village” to use the streets; and the provisions of the statute were made to apply to any corporation theretofore organized and then operating its plant by consent of the municipality.

In the case of La Crosse v. La Crosse City Gas & Elec. Co., 145 Wis. 408, 130 N. W. 530, this statute was construed. Subject to the statute an ordinance called a franchise was given to an electric company requiring it to pay into the treasury of the city 2 per cent. of its gross earnings, in addition to such other taxes as were provided by law. It was held that the language of the statute contemplated no more than police regulations and that the requirement objected to was void. In State ex rel. Wis. Tel. Co. v. City of Sheboygan, 111 Wis. 23, 86 N. W. 657, the city claimed the right, in granting a so-called franchise, to impose various conditions, such as that the city might fix rates of charges, that the company must consent to sell its privileges at an appraised value, consent to the free use by the city of a part or all of its poles, and consent to other uses of the property by the city. This court held that the company derived its powers directly from the state; that no power was given to the...