People By Public Utilities Commission v. City of Fresno

• Decision Date: 01 September 1967
• Citation: 62 Cal.Rptr. 79,254 Cal.App.2d 76
• Court: California Court of Appeals Court of Appeals
• Parties: PEOPLE of the State of California, By the PUBLIC UTILITIES COMMISSION of the State of California, Plaintiff and Appellant, v. CITY OF FRESNO et al., Defendants and Respondents. Civ. 744.

Page 79

62 Cal.Rptr. 79

254 Cal.App.2d 76

PEOPLE of the State of California, By the PUBLIC UTILITIES COMMISSION of the State of California, Plaintiff and Appellant, v. CITY OF FRESNO et al., Defendants and Respondents.

Civ. 744.

Court of Appeal, Fifth District, California.

Sept. 1, 1967.

Hearing Denied Nov. 22, 1967.

Mary Moran Pajalich, Chief Counsel, and John C. Gilman, Associate Counsel, Public Utilities Com., San Francisco, for plaintiff and appellant.

Lerrigo, Thuesen & Thompson and Maurice E. Smith, Fresno, amici curiae, in support of appellant.

Robert H. Baida, City Atty., Spencer Thomas, Jr., and James W. Shumar, Asst. City Attys., Alan D. Davidson and David M. Kennedy, Deputy City Attys., Fresno, for respondent City of Fresno.

Crossland, Crossland, Richardson & Caswell, Fresno, for respondent Bowen Land Co.

GARGANO, Associate Justice.

Appellate instituted this action to set aside a final judgment of condemnation acquired by respondent City of Fresno against the Bowen Land Company, Inc., a public utility company. Respondents filed general demurrers to the complaint, which were sustained by the trial court (Judge Thompson) with leave to amend. Appellant, however, elected to rest on its complaint, and after it failed to amend, respondents' motion for a dismissal of the complaint was granted by the court (Judge Meyers). Appellant appeals from the judgment of dismissal.

Since appellant elected not to amend its complaint, a strict construction of the pleadings is required, and we must assume that it pleaded as strong a case as it could (Vaughn v. Certified Life Ins. Co., 238 Cal.App.2d 177, 47 Cal.Rptr. 619). Accordingly, the facts are essentially as follows: The Bowen Land Company, Inc., hereinafter referred to as the water company, was engaged in the business of furnishing water to consumers residing in a service area located in substantial part outside of the boundaries of the City of Fresno. In July of 1965 the company agreed to sell its entire water system and related facilities to the City of Fresno, hereafter referred to as respondent, for the purchase price of $25,000. A joint application was filed by the parties with the Public Utilities Commission of the State of California, hereafter referred to as the commission, pursuant to Public Utilities Code section 851, seeking commission approval of the sale. In September of 1965 the commission stated that the proposed agreement of sale between the water company and respondent did not protect the water company's consumers; but it approved the sale (to take effect one year thereafter) subject to certain conditions, including a promise by respondent that it would not discriminate against consumers of the water system who lived outside of the City of Fresno. However, instead of accepting the conditions imposed by the commission, respondent instituted an action in the Superior Court of Fresno County to condemn the water company's system, alleging in its complaint that the fair market value thereof was $25,000. The water company then filed an answer admitting that the fair market value of its water system was as alleged by respondent in its complaint. Accordingly, the trial court entered judgment on the pleadings in favor of respondent, and it is this judgment that appellant seeks to set aside.

Appellant admits that the superior court is the only tribunal with jurisdiction to entertain an action instituted by a public entity (such as a city) to condemn property belonging to a public utility company. It also admits that, if the amount of compensation to be paid for the property to be condemned is the only dispute between the parties, the superior court is the only tribunal with authority to decide the issue. Appellant contends, however, that the superior court may not enter a final unconditional judgment transferring title to such property to the condemnor until and unless the commission has granted its approval under section 851 of the Public Utilities Code, and that if the court does, it exceeds its authority and the judgment is void. This section reads in part as follows:

'No public utility * * * shall sell, lease, assign, mortgage, or otherwise dispose of or encumber the whole or any part of its railroad, street railroad, line, plant, system, or other property necessary or useful in the performance of its duties to the public, or any franchise or permit or any right thereunder, nor by any means whatsoever, directly or indirectly, merge or consolidate its railroad, street railroad, line, plant, system, or other property, or franchises or permits or any part thereof, with any other public utility, without first having secured from the commission an order authorizing it so to do. Every such sale, lease assignment, mortgage, disposition, encumbrance, merger, or consolidation made other than in accordance with the order of the commission authorizing it is void. * * *'

Accordingly, appellant concludes that its complaint alleged sufficient facts to state a cause of action for the relief requested and that the court erred in sustaining respondent's general demurrer.

Admittedly, the commission fulfills a vital and significant role in the scheme of government. In fact, it is the only public agency which is constitutionally constructed to protect the public from the consequences of monopoly in public service industries (Cal. Motor Transport Co. v. Railroad Com., 30 Cal.2d 184, 180 P.2d 912; Sale v. Railroad Commission, 15 Cal.2d 612, 104 P.2d 38). However, the primary function of the commission is to regulate private property dedicated to a public use and to exercise control over private companies engaged in public service (Cal.Const., art. XII, § 23; Cal.Water & Tel. Co. v. Public Util. Com., 51 Cal.2d 478, 334 P.2d 887). Moreover, as a regulatory body of constitutional origin it has only such powers as it derives from the Constitution and from the Legislature (Cal.Const., art. XII, § 23; Television Transmission v. Public Util.Com., 47 Cal.2d 82, 301 P.2d 862; Northwestern Pac. R.R. Co. v. Superior Ct., 34 Cal.2d 454, 211 P.2d 571). Thus, in the absence of specific legislation to the contrary, the commission has no jurisdiction to regulate public districts or municipalities (Los Angeles Met. Transit Authority v. Public Utilities Com., 52 Cal.2d 655, 343 P.2d 913).

On the other hand, the power of eminent domain which is inherent in government is regulated solely by the Legislature. ¹ In fact, Code of Civil Procedure section 1237 reads as follows:

'Eminent domain is the right of the people or Government to take private property for public use. This right may be exercised in the manner provided in this Title.' (Emphasis added.)

Consequently, the city's power to condemn property for a city use emanates from the Legislature, and we must look to the legislative enactments in order to determine the extent or limitation of this power.

Under Code of Civil Procedure section 1240 it is clear that a city may, by condemnation, take property already appropriated to a public use if the public use to which it is to be applied is a more necessary public use. ² Moreover, under Code of Civil Procedure section 1241 a city is expressly authorized to condemn property belonging to a public utility already dedicated to public use. In addition, the proposed city use is deemed a 'more necessary public use' as a matter of law. ³ It is therefore manifest that the crucial question is whether Public Utilities Code section 851 regulates the otherwise unrestricted power of the city to condemn public utility property under Code of Civil Procedure section 1241 by requiring the consent of the commission before the superior court may enter a final judgment of condemnation. We conclude that the answer to this crucial question is in the negative for at least three basic and salient reasons.

(1) First and foremost, the plain language of section 851 itself indicates that it was designed to regulate the actions of a public utility in its own dealings with property which has been appropriated to public use and is affected by the public interest. However, it contains no express language which purports to control or affect a public entity which is exercising its own separate, distinct, and independent power to acquire property for a public use through the exercise of the power of eminent domain. The section simply provides that '(n)o public utility (meaning a private company or individual) shall sell, lease, assign, mortgage, or otherwise dispose of or encumber (meaning by its own action whether voluntary or involuntary) the whole or any part of its * * * property necessary or useful in the performance of its duties to the public (recognizing the public character of the property) * * * without first having secured from the commission an order authorizing it so to do.'

It is a cardinal rule that a court is not justified in ignoring the plain words of a statute unless it clearly appears that the language used is contrary to what, beyond question, was the intent of the Legislature (Twaits v. State Board of Equalization 93 Cal.App.2d 796, 210 P.2d 40). As we have stated, the main function of the commission, as contemplated by the Constitution, is to regulate private companies or individuals engaged in public service, in order to prevent monopolies which would jeopardize the public interest. As we have also stated, the commission's jurisdiction to do so does not extend to public agencies engaged in similar public service unless the Legislature has so provided. Hence, although it is clear that Public Utilities Code section 851 was enacted by the Legislature to implement the commission's powers with regard to its normal constitutional function, it is not clear that the Legislature also intended to regulate, restrict or hamper public agencies which are exercising the right of eminent domain. To the contrary, eminent domain is an attribute of sovereignty and must not be restricted by...