Public Utilities Commission, Dept. of Regulatory Agencies v. Honolulu Rapid Transit Co., Ltd.

• Citation: 530 P.2d 742,56 Haw. 115
• Decision Date: 13 January 1975
• Docket Number: No. 5456,5456
• Parties: PUBLIC UTILITIES COMMISSION, DEPARTMENT OF REGULATORY AGENCIES, State of Hawaii, Plaintiff-Appellant, v. HONOLULU RAPID TRANSIT COMPANY, LIMITED, a Hawaii Corporation, Defendant and Third-Party Plaintiff-Appellee, v. CITY AND COUNTY OF HONOLULU, a Hawaii Municipal Corporation and M.T.L., Inc., a Hawaii Corporation, Third-Party Defendants.
• Court: Hawaii Supreme Court

Page 742

530 P.2d 742

56 Haw. 115

PUBLIC UTILITIES COMMISSION, DEPARTMENT OF REGULATORY

AGENCIES, State of Hawaii, Plaintiff-Appellant, v. HONOLULU RAPID TRANSIT COMPANY, LIMITED, a Hawaii

Corporation, Defendant and Third-Party Plaintiff-Appellee, v. CITY AND COUNTY OF HONOLULU, a Hawaii Municipal Corporation and M.T.L., Inc., a Hawaii Corporation,

Third-Party Defendants.

No. 5456.

Supreme Court of Hawai'i.

Jan. 13, 1975.

Syllabus by the Court

1. Companies subject to HRS § 269-30 fees are determined by HRS § 269-1, the statutory definition of 'public utility.'

2. In determining whether a lessor company owns property 'indirectly for public use' within HRS § 269-1, the statutory definition of 'public utility,' the court must examine the exact relationship between lessor and lessee.

3. The statutory scheme of HRS ch. 269 displays a public policy that favors Public Utility Commission jurisdiction over activities where the public welfare depends on proper conduct and regulation.

There is particular reason for favoring PUC jurisdiction when a public utility terminates its business. The public interest favors PUC power to investigate the reasons why a company ceases to serve the public.

Harry S. Y. Kim, Deputy Atty. Gen. (George Pai, Atty. Gen., Honolulu, with him on the briefs), for appellant.

Arthur B. Reinwald and David A. Ezra, Honolulu (Anthony, Hoddick, Reinwald & O'Connor, Honolulu, of counsel), for appellee.

Before RICHARDSON, C. J., KOBAYASHI, OGATA and MENOR, JJ., and SHINTAKU, Circuit Judge, assigned by reason of vacancy.

RICHARDSON, Chief Justice.

This is an appeal by the Public Utilities Commission from summary judgment granted by the first circuit court in favor of Honolulu Rapid Transit Company, Limited.

Under HRS § 269-30 ¹ the Public Utilities Commission, hereinafter PUC, seeks to assess Honolulu Rapid Transit Company these facts, the trial court found that HRT Limited, hereinafter HRT, one-eighth of one percent of its gross income from public utility business in calendar year 1970. HRT contends that it was not a 'public utility' in 1971 and therefore is not subject to the fee. The issue is whether HRT was a 'public utility' within the meaning of HRS § 269-30 during 1971.

The relevant facts as set forth in the affidavits and as found by the trial judge follows:

In 1970 HRT appeared to be caught between a static fare structure and labor demands. HRT had been operating under a fare structure established in 1961. HRT notified the Teamsters and Allied Workers Local 996, hereinafter the union, on March 2, 1970 that HRT could not negotiate a new contract because of HRT's financial situation. On June 8, 1970, the union sought a 50cents per hour increase for all employees. Negotiations commenced on July 23, 1970 and continued through the expiration of the contract until December 31, 1970, when the union struck. HRT did not operate any buses after the strike began.

At the same time, the City was moving to maintain service through another corporation. The City Council resolved on August 25, 1970 to acquire HRT's assets and business by requesting the PUC to establish valuation of HAT property according to the franchise. On September 8, 1970 the Council passed Bill No. 109 authorizing the Mayor to puchase the physical and tangible property of HRT, and the Council petitioned the PUC for the valuation of HRT property. On September 14, 1970, Mass Transit Lines, Inc., hereinafter MTL, was incorporated under state law. The Council on February 25, 1971 authorized the City to enter a management contract with MTL to manage a mass transit system, and on February 28, 1971 MTL and the union entered a labor agreement which provided the 50cents per hour wage increase sought by the union from HRT. Mass transit operations in the city resumed on March 1, 1971 conducted by MTL and the union.

The PUC made demands in 1971 for fees allegedly due from HRT under HRS § 269-30; HRT did not pay, and the PUC brought an action for a statutory account.

HRS § 269-1 ² defines a 'public utility.' In this case a 'public utility' must have the following elements:

1) It is a 'person'

2) who owns, controls, operates, or manages

3) as owner, lessee, trustee, receiver, or otherwise,

4) under a franchise, charter, license, articles of association, or otherwise,

5) any plant or equipment, or any part thereof,

6) directly or indirectly for public use, (and in this case)

7) for the transportation of passengers or freight.

With respect to the statutory definition the record in this case indicates the following: HRT is a corporation (and a corporation may be a 'person,' HRS § 1-19). While the affidavits filed by the PUC and HRT in support of their motions for summary judgment do not set forth possessed a franchise during 1971, the year for which the PUC seeks to collect the tax, and that HRT retained all of its assets after the strike began on December 31, 1970, with the exception of 41 buses which it sold to the City and County in early 1971. Presumably HRT did own as owner under a franchise some plant and equipment in 1971, but the record does not disclose whether such property was owned 'directly or indirectly for public use for the transportation of passengers or freight.' The question of whether HRT totally ceased doing public utility business, given the facts above, is not proved by legal conclusions in affidavits. ³ Further fact-finding is accordingly necessary.

On the subject of statutory interpretation, we note that the phrase 'directly or indirectly for public use' appears quite broad in the context of 'owning as owner under a franchise any plant or equipment directly or indirectly for public use for the transportation of passengers,' an applicable statutory definition. Appellee HRT argues that owners of property qualify as public utilities only if their property is actually used for public use. Whether the phrase 'for public use' refers to the intended use or the actual use of the property involved, ownership for such use must be examined in both its direct and indirect context.

Representation was made to this court that HRT leased buses to MTL and the issue is raised whether such a lease might qualify as ownership 'indirectly for public use.' Case law indicates that a mere 'inactive lessor' is not a public utility, Columbia Gaslight Co. v. Mobley, 139 S.C. 107, 137 S.E. 211 (1927); Sayre Land Co. v. Penn, P. U. C., 196 Pa.Super. 417, 175 A.2d 307 (1961), aff'd, 409 Pa. 356, 185 A.2d 325 (1962)....