New England Tel. & Tel. Co. v. Public Utilities Commission

• Decision Date: 27 January 1953
• Citation: 94 A.2d 801,148 Me. 374
• Parties: NEW ENGLAND TEL. & TEL. CO. v. PUBLIC UTILITIES COMMISSION.
• Court: Maine Supreme Court

Page 801

94 A.2d 801

148 Me. 374

NEW ENGLAND TEL. & TEL. CO. v. PUBLIC UTILITIES COMMISSION.

Supreme Judicial Court of Maine.

Jan. 27, 1953.

Locke, Campbell, Reid & Hebert, James L. Reid, Augusta, Hutchinson, Pierce, Atwood & Scribner, Leonard A. Pierce, Portland, Me., William M. Hogan, Jr., Boston, Mass. (John M. Gepson, Boston, Mass., of counsel), for New England Telephone and Telegraph Co.

Alexander A. La Fleur, Atty. Gen., Ernest L. Goodspeed, Asst. Atty. Gen., for the State.

A. F. Martin, Lewiston, for City of Lewiston.

Before MURCHIE, C. J., and THAXTER, FELLOWS, MERRILL and NULTY, JJ

THAXTER, Justice.

This complaint was filed November 30, 1950 in accordance with R.S.1944, Ch. 40, and particularly under the provisions of section 61 of that chapter. It alleges that the Public Utilities Commission of Maine has jurisdiction over the operations of the Telephone Company within the State of Maine; that its rates are not now reasonable and just taking into consideration the fair value of its property devoted to intrastate telephone service with a fair return thereon; that such rates unless increased will continue to be unjust, unreasonable and insufficient, in that revenues and net earnings will continue to be insufficient to yield a fair return. And more particularly the Company points out that there have been substantial increases in its operating expenses due in part to economic changes attending the Korean war and the country's rearmament program, increased wages, and increased taxes; that the Company must make additional expenditures to its plant to maintain, extend and improve its service; and that its credit has already begun to suffer due in part to these conditions and to its inability to earn a fair return on the fair value of its property devoted to the public service within the State of Maine. The Company asks that the Commission investigate its rate structure for intrastate business for the purpose of remedying these conditions. Findings of fact were requested from the Commission, including findings 'as to the fair value of Respondent's property devoted to the public use, the rate of return thereon allowed, and its income and operating expenses'.

The Company in 1948 had failed with the Public Utilities Commission and in accordance with the provisions of R.S.1944, Ch. 40, § 73, a petition, No. 1316, praying for emergency relief in the form of an order authorizing an interim increase in rates pending disposition of an entirely new schedule. A thorough investigation was made by the Commission on that complaint; and extensive findings were made. The Commission cancelled certain of the proposed rates which had been filed by the Company; accepted others subject to some amendments, and the Company proceeded to operate under the new schedule of rates ordered and approved by the Commission. According to the contention of the present petition the Company found, however, that costs were still rising and that under the decree of the Commission it was unable to earn a fair return on the fair value of its property used in intrastate service. Accordingly, on November 30, 1950, the present complaint, No. 1370, was filed praying for a further investigation and hearing and that reasonable earnings be allowed to provide a fair return on the fair value of its property devoted to the public service in the State of Maine. Such hearing was had and on May 19, 1952 an order was filed by the Commission that this new complaint be dismissed. In this case, as in the preceding one, Commissioner Hill dissented. By agreement of counsel the record and order in the earlier case, No. 1316, are made a part of the record in this.

Exceptions to the decree of the Commission were filed by the Telephone Company and the case is before us on these exceptions.

The Commission is the judge of the facts in rate cases such as this. This court under the statute which created it is only a court to decide questions of law. It must be so, for it has not at its disposal the engineering and the technical skill to decide questions of fact which were wisely left within the province of the Commission. Only when the Commission abuses the discretion entrusted to it, or fails to follow the mandate of the legislature, or to be bound by the prohibitions of the constitution, can this court intervene. Then the question becomes one of law. We cannot review the Commission's findings of fact and seek to determine what rates are reasonable and just. When the Commission decides a case before it without evidence, or on inadmissible evidence, or improperly interprets the evidence before it, then the question becomes one of law. The rule is the same is in hearings on appeals from the Industrial Accident Commission. Hinckley's Case, 136 Me. 403, 11 A.2d 485.

The exceptions are ten in number.

Exception 1 is to the order of the Commission dismissing the petition of the Company, and alleges that such order or decree of dismissal compels the Company to provide service at rates which are insufficient to yield a fair return on the fair value of its property used in providing service within the State of Maine.

Exception 2 is to the refusal of the Commission to consider current costs in figuring the rate base for determining the fair value of the Company's property used in furnishing intrastate service in Maine.

Exception 4 is substantially to the same effect as Exception 2 and alleges that the ruling of the Commission referred to in such exception does not take into consideration the fair value of the Company's property used in furnishing intrastate service in Maine and does not provide a fair return on such property.

The other exceptions which will be considered hereafter are to certain specific rulings on subsidiary points in which it is declared that the same error to consider fair value appears in each specific instance or that there is an apparent error in figuring net earnings either in including or excluding relevant evidence as to value of the Company's property devoted to public service within the State of Maine, or that certain expenses for service within Maine are wrongfully excluded.

In short, all these ten exceptions raise questions of law, the main complaint being that the Commission has failed to follow the mandate of the statute in its refusal to give consideration to the evidence of the present fair value of the Company's property as required by sections 16 and 17 of R.S.1944, Ch. 40. These sections read as follows:

'Sec. 16. Public utility to furnish safe and reasonable facilities; charges to be reasonable and just. R.S. c. 62, § 16. Every public utility is required to furnish safe, reasonable, and adequate facilities. The rate, toll, or charge, or any joint rate made, exacted, demanded, or collected by any public utility for the conveyance or transportation of persons or property between points within this state, or for any heat, light, water, or power produced, transmitted, delivered, or furnished, or for any telephone or telegraph message conveyed, or for any service rendered or to be rendered in connection with any public utility, shall be reasonable and just, taking into due consideration the fair value of all its property with a fair return thereon, its rights and plant as a going concern, business risk, and depreciation. Every unjust or unreasonable charge for such service is prohibited and declared unlawful.

'Sec. 17. Valuation of property to be made if necessary for fixing rates. R.S. c. 62, § 40. The commission shall fix a reasonable value upon all the property of any public utility used or required to be used in its service to the public within the state whenever it deems a valuation thereof to be necessary for the fixing of fair and reasonable rates, tolls, and charges; and in making such valuation it may avail itself of any reports, records, or other information available to it in the office of any state officer or board.'

The Commission not only receives its authority from the Maine statute but is bound by the provisions of the state and federal constitutions which forbid the taking of private property without just compensation. Constitution of Maine, Article I, § 21; Constitution of the United States, Amendments, Articles V and XIV. It is unnecessary to discuss these overriding constitutional provisions because, as we have before said, the Maine Public Utilities Commission is a creature of statute and bound to act in accordance with the statute which created it. This, as the exceptions before us point out, it has not done. Without expressing any opinion on the constitutional questions here involved, if there are any, we shall discuss these exceptions. These allege in general that the Commission in establishing and approving rates for telephone service within the State of Maine has not followed the statutory mandate particularly in that it did not give due consideration to the fair value of the Company's property within the State of Maine with a fair return thereon. Of the three commissioners, Commissioner Hill in an able opinion dissented.

Exception 1.

The record in this case shows that the Telephone Company, which is the complainant in this case, is a New York corporation doing business in Maine, New Hampshire, Massachusetts, Vermont and Rhode Island, and is subject to the jurisdiction of the Public Utilities Commission of the State of Maine insofar as its intrastate traffic in Maine is concerned. It is one of the component parts of the American Telephone & Telegraph system and is physically interconnected with the other companies of such system. The stocks of the companies comprising this vast enterprise are controlled by said American company, together with the stocks of certain corporations which manufacture supplies and do research work for the system as a whole. Its services beyond the State of Maine are under the control of the Federal Communications Commission and of the various regulatory bodies in the...