People ex tel. Consol. Water Co. of Utica v. Maltble

• Decision Date: 13 July 1937
• Parties: PEOPLE ex rel. CONSOLIDATED WATER CO. OF UTICA, N. Y., v. MALTBLE et al.
• Court: New York Court of Appeals Court of Appeals

275 N.Y. 357

9 N.E.2d 961

PEOPLE ex rel. CONSOLIDATED WATER CO. OF UTICA, N. Y.,

v.MALTBLE et al.

Court of Appeals of New York.

July 13, 1937.

Certiorari proceeding by the People of the state of New York, on the relation of the Consolidated Water Company of Utica, N.Y., against Milo R. Maltbie and others, as commissioners and constituting the Public Service Commission of the state of New York, to review certain determinations and orders of the Public Service Commission. From an order of the Appellate Division, Third Department (245 App.Div. 866, 282 N.Y.S. 412), affirming the determinations of the Public Service Commission, the relator appeals.

Affirmed. Appeal from Supreme Court, Appellate Division, Third Department.

Thayer Burgess, of Utica, for appellant.

Gay H. Brown, of Utica, George E. McVay, of Huguenot Park, S. I., and Raymond J. McVeigh, or New York City, for respondent.

LEHMAN, Judge.

The relator is a corporation which furnishes and distributes water in the city of Utica and its vicinity. By chapter 715 of the Laws of 1931 (section 3), which added article 4-B to the Public Service Law (Consol.Laws, c. 48 [section 89-a et seq.]), the Public Service Commission was given specified powers of supervision and control over such corporations. In July, 1931, pursuant to provisions in the statute, the water company filed with the commission a schedule of rates for water service. The company notified the mayor of the city of Utica that the rates in that schedule were not sufficient to afford a fair and reasonable return upon its property, but that it was willing to forego a higher rate sufficient to yield such return until business conditions improved. The city of Utica did not accede to the company's claim that the proposed rates were insufficient to yield a reasonable return on the company's property. It promptly filed with the commission a complaint against the rates in that schedule. Thereupon the company filed a schedule increasing its proposed charges. By stipulation the second schedule of rates was suspended until the determination of the proceedings based upon the complaint of the city and some of the surrounding villages. On June 28, 1933, the commission made an order which directed that the company reduce the rates contained in its first schedule and which it had previously charged. An application of the company for a rehearing was denied. Then the company obtained an order of certiorari. The Appellate Division by a divided court confirmed the determination of the commission.

The Public Service Commission held hearings for more than a year in which the company and the city had full opportunity to present evidence in regard to every relevant factor in the proper determination of what rates would be reasonable and would be sufficient to yield a fair return on the company property. The last hearing was held on December 23, 1932. The matter was finally submitted to the commission on March 1, 1933. Two of the commissioners joined in a report in which they found that the ‘fair value of all of the property of the Consolidated Water Company of Utica, N.Y., used and useful in rendering water service to its consumers is $5,850,000.’ ‘That the company is entitled to a return of 6% upon such fair value,’ and that ‘the company should decrease its rates to effect a reduction in its revenues of at least $120,000 per annum.’ The two commissioners in their report set forth at length the evidence upon which they based these findings, and the weight which they gave to each factor which in their opinion should enter into a determination of value. Another commissioner concurred in the report, and two other commissioners filed concurring opinions stating in effect that they reached the same result but by different reasoning. The majority of the Appellate Division in confirming the determination stated in a per curiam opinion: ‘The principal questions raised relate to the determination by the Commission of the value of relator's property used and useful in the public service. This is a question of fact and there is ample evidence to sustain the determination below.’ 245 App.Div. 866, 282 N.Y.S. 412, 413.

Upon this appeal, the appellant maintains that the determination of the value of its property is arbitrary, based on erroneous methods, without competent evidence to support it, and is confiscatory; that the return of 6 per cent. allowed by the commission is inadequate and unreasonable; that the order of the commission to reduce its rates results in the confiscation of the company's property; that the appellant had an absolute right to a rehearing for the purpose of showing that after the hearing there had been a marked rise in prices; that the appellant had a right to have questions of fact relating to the issue of whether the rate is confiscatory, determined by the Appellate Division, through the exercise of its independent judgment. The appellant urges that through these errors it has been deprived of its property in violation of the provisions of the Constitution of the state (article 1, § 6) and of the Fourteenth Amendment to the Constitution of the United States.

The classic formula for the ascertainment of the fair value of property used by a corporation for the convenience of the public is stated in Smyth v. Ames, 169 U.S. 466, at page 546, 18 S.Ct. 418, 434, 42 L.Ed. 819: ‘In order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that there may not be other matters to be regarded in estimating the value of the property.’ In subsequent cases in the same court the formula has been reconsidered at times, and even restated in somewhat different form. We do not pause to analyze these separate decisions and opinions. In one case some factor may be given a weight which has been denied to it in another case. There may be variation in emphasis in these cases and at times a difference of opinion among judges not only as to the relative weight to be given to particular factors, but even as to whether a particular factor must in all circumstances be given any weight. Nevertheless, the guiding principle consistently followed in all cases is that value depends upon varying and often unstable factors and often must be determined by prophecy as to probable change of conditions. Consistently the court has rejected the possibility of formulating a rigid standard which may be mechanically applied in measuring values in all circumstances. Every factor which may reasonably affect the determination of value in a particular case must be given the weight which it deserves. Earlier decisions may guide judgment in analogous cases; they are not intended to constrain judgment under circumstances where reason points to other conclusions.

The commissioners who held the hearing received all the evidence, then available and offered, which upon any theory suggested by either side might be material and relevant upon the questions, which the commission was called upon to decide. In the report they made, consideration was given to each factor which the Supreme Court, in any case, had said or implied might be an element of value. To some of these factors, little if any weight was given and the determination of value rests almost exclusively upon the testimony of witnesses called by the complainants or by the commission. In regard to each matter of substance the report contains an exhaustive statement of the reasons which influenced the choice of the commissioners who joined in the report. The arguments of this appellant are not without force that the reasons given for the choice are not always sound. As we have said, two of the commissioners who joined in the decisions of the commission did not concur in the reasons for the decision given in the report. Perhaps the judges of this court might, if they were triers of fact, give greater weight to the testimony and the theories of the experts produced by the company than the commission has given. In this court the determination of the commission upon any question of fact is not open to review. We may reverse a decision or annul a determination only for erroneous determination of a question of law, and after careful consideration of the appellant's argument, we find no errors there. Upon every point where the determination of the commission is challenged, we find...