Public Service Co. v. City and County of Denver
| Decision Date | 04 November 1963 |
| Docket Number | No. 20683,20683 |
| Parties | PUBLIC SERVICE COMPANY of Colorado, a Colorado corporation, Plaintiff in Error, v. CITY AND COUNTY OF DENVER, a Municipal corporation, Thomas G. Currigan, City Auditor of the City and County of Denver, a Municipal corporation, and Frank K. Southworth, Manager of Revenue of the City and County of Denver, a Municipal corporation, Defendant in Error. |
| Court | Colorado Supreme Court |
Lee, Bryans, Kelly & Stansfield, Robert S. Gast, Jr., Denver, for plaintiff in error.
Robert S. Wham, Denver, for defendants in error City & County of Denver and Frank K. Southworth.
Gorsuch, Kirgis, Campbell, Walker & Grover, Dwight D. Murphey, Denver, for defendant in error, Thomas G. Currigan.
The parties to this action are as follows: Public Service Company of Colorado, plaintiff in the trial court, to whom we will refer as the Company; City and County of Denver, a defendant in the trial court hereinafter referred to as the city; Thomas G. Currigan, City Auditor and a defendant in the trial court, hereinafter referred to as the Auditor; Frank K. Southworth, Manager of Revenue and a defendant in the trial court, to whom we will refer as the Manager. The gas consumers in the city who are customers of the Company will be referred to as consumers.
The Company brought suit in the district court against the above named defendants to recover moneys allegedly paid in excess of the sums legally due under the provisions of the franchise under which the Company serves consumers of gas within the city. The Auditor filed an answer in which he set forth equitable and legal defenses, which we find unnecessary to incorporate herein in detail. He also filed a counterclaim against the Company to recover for the city certain moneys allegedly due under the franchise by reason of an asserted improper deduction by the Company of $48,694.52 as a set-off against the amount due according to a quarterly report of the Company under the terms of the franchise. This deduction was made by the Company in October 1955, under a claim that it had overpaid the city for the period between August 1952 and December 1953. The Manager and the city filed an answer in which they supported the claim of the Company. They acknowledged, in their brief '* * * that there are substantial questions of law with respect to the matters raised in the litigation and ask the Court to adjudicate the rights of the parties.'
Pursuant to a vote of the taxpaying electors of the city an ordinance granting a gas and electric franchise to the Company became effective February 14, 1947, the provisions thereof which are pertinent to this controversy are as follows:
'Section XIII. As a further consideration of this franchise, and in lieu of all occupancy and license taxes or other taxes on the right to do business, the Company agrees to pay a sum equal to three per cent (3%) on the gross revenue derived from the sale of electrical energy by the Company within the corporate limits of the City and County of Denver, and a sum equal to three per cent (3%) on the gross revenue derived from the sale of gas by the Company within the corporate limits of the City and County of Denver.
'The term 'gross revenue' as used herein shall be construed to mean any revenue earned within the City and County of Denver from the sale of electrical energy and gas, after adjustment for the net write-off of uncollectable accounts and corrections of bills theretofore rendered. * * *
The controversy arises by reason of four increases in rates made by wholesalers of gas to the Company for resale to its consumers. These increases in rates were authorized by the Federal Power Commission as a temporary matter. The Public Utility Commission of Colorado authorized the Company to pass the increased cost on to its consumers. This increase in rates charged the consumers by the Company necessarily included the item of increased payments to the city occasioned by the higher 'gross revenue' as defined in the franchise. The Federal Power Commission subsequently cancelled the increase in wholesale rates which had been previously authorized and ordered the wholesalers to refund to the Company the exact amount which had been collected thereunder by the wholesalers. The Public Utilities Commission thereupon ordered the Company to refund to its consumers the amount refunded by the wholesalers, and characterized the refund as moneys held in trust by the Company for the benefit of its consumers. The function of the Company under the order of the Public Utilities Commission was to serve as a conduit through which the refunded moneys should flow from the wholesalers to the consumers. A carefully prepared formula was agreed upon, based on sample months and averages rather than on an individual customer by customer charge of individual bills for the period involved. All the expenses of the Company involved in the distribution of the money to the consumers were paid as a charge upon the trust funds.
January 7, 1960, the Company filed its claim with the Auditor for $249,795.26, asserting that this amount was due it for the reason that an overpayment in that amount had been made under the terms of the franchise for the years 1954 to 1958--all brought about by the cancellation of the rate increases which were 'temporarily' in effect during those years. (The figure above mentioned was the balance allegedly due after the Company had set off the $48,694.52 to which reference has already been made.) June 11, 1962, the Company filed its claim with the Auditor for an additional refund of an alleged similar overpayment of moneys due the city under the franchise for the 1958 to 1960 period, in the amount of $149,406.88.
All pertinent facts were stipulated and the trial court entered judgment upon motion for summary judgment. The trial court denied the Company's claims as to the $249,795.26 and $149,406.88, and granted the Auditor's counterclaim against the Company for $48,694.52. The Company is here by writ of error directed to this judgment.
The Company and the city must find justification for their respective positions within the four corners of the franchise, which is the contract between them and by which they are bound. Said document was finalized after lengthy negotiations, action by the city council, and approval by the qualified voters of the city. An examination of this franchise agreement discloses a well prepared and comprehensive statement of the rights, duties and obligations of the parties thereto. The language employed is clear and expresses an intent which is not clouded by ambiguities.
In considering public utilities franchise agreements the courts are bound to give a liberal construction in favor of the municipality in the protection of the public. The general rule in this connection is stated in 63 C.J.S. Municipal Corporations § 1013, p. 605 as follows:
'However, such contracts while relating to the business interests of the city, are not of a private nature, but are of public concern and amenable to the rules of law applicable to public utilities, one of which is that the grant of a public utility franchise is to be liberally construed in favor of the public; * * *'
We now consider the question of whether the Company is entitled, under the terms and conditions of the contract and the facts hereinabove stated, to recover the $399,201.94 represented by the claims filed with the Auditor.
Pursuant to the provisions of the franchise contract hereinabove quoted, the Company '* * * filed a report of its gross revenue within forty-five days after the close of each quarter in each calendar year * * *' for all the years involved in the litigation. Each of these quarterly reports did, '* * * contain a statement of the gross revenue classified according to the rate schedules then in force and effect and a statement of any deductions made because of adjustments and corrections as herein provided together with a computation of the tax to be paid.' (Emphasis supplied.)
In all of these reports there was no mention of any refund received, claimed, or contemplated in the future. The amount paid for each quarter was the correct sum owed to the city under 'the rate schedules then in force and effect.' No 'adjustment for the net write-off of uncollectable accounts and correction of bills theretofore rendered' is involved for the reason that the Company became a holder of the refund from the wholesalers in trust for the use and benefit of its consumers, and for the further reason that in serving as a conduit for the return of funds to the consumers the process did not involve a 'net write-off of...
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