Puget Sound Intern. Ry. & Power Co. v. Kuykendall

• Citation: 293 F. 791
• Decision Date: 13 November 1923
• Docket Number: 101-E.
• Court: U.S. District Court — Western District of Washington
• Parties: PUGET SOUND INTERNATIONAL RY. & POWER CO. v. KUYKENDALL et al. (CITY OF EVERETT et al., Interveners).

293 F. 791

PUGET SOUND INTERNATIONAL RY. & POWER CO. v. KUYKENDALL et al. (CITY OF EVERETT et al., Interveners).

No. 101-E.

United States District Court, W.D. Washington, Southern Division.

November 13, 1923

James B. Howe, of Seattle, Wash., and J. A. Coleman, of Everett Wash., for plaintiff.

L. L Thompson, Atty. Gen., and Raymond W. Clifford, Asst. Atty Gen., for defendants.

Erskine Wood, of Portland, Or., amicus curiae.

R. J Faussett and J. W. Dootson, both of Everett, Wash., for interveners.

CUSHMAN District Judge.

After the motion to dismiss herein was overruled by the court the defendants answered, as did the city of Everett. The case has been submitted upon stipulated facts. It is not necessary to consider the evidence, unless the controlling allegations of the bill, held sufficient upon motion to dismiss, have been put in issue by the answer of the defendants. In the absence of such denials, the case may be considered as upon motion for decree upon the bill and answer. In determining this question, specific admissions in the answer must outweigh general denials.

The plaintiff, under franchises, furnishes light for buildings and residences in the city of Everett, and furnishes power in the operation of the street railway and municipal pumps. These services are admitted to be public. It also sells power for heating and manufacturing purposes to individuals and private corporations. This business the plaintiff contends is private, and defendants that it is public. No claim has been made that the latter two uses or purposes are different in any respect, under the principles of law applicable.

Upon the motion to dismiss it was held to be 'perfectly clear that the order of the Public Service Commission requires the plaintiff to reduce its charges to the public for lighting to the amount that its power business nets it in excess of 8 per cent. per annum, and that the disclosures required by defendants regarding plaintiff's power business and contracts are simply a means to that end'; the power business mentioned being the power sold to individuals and private corporations. The action proposed by the commission, as shown by the bill, would require plaintiff to reduce its rates in its private business, and was held to be a taking of its property, in violation of the Fourteenth Amendment to the Constitution. In the answer appears, among others, the following allegations and admissions:

'Answering paragraph VIII, they deny that the light and power business of the plaintiff consisted and now consists of public and private business, and they say that the entire light and power business of the plaintiff is a service of the public in the capacity of a public utility, subject to the regulation of the Public Service Commission of the state of Washington, as by statute provided. * * * They deny that plaintiff sold and now sells any electrical energy for either light or power, otherwise than as a service to the public and in its capacity as a service utility.'

The answer further alleges that the Public Service Commission had found:

'That a substantial and very material part of respondent's business is the distribution, sale, and furnishing of electricity as power and for power purposes, and that the electricity so distributed, sold and furnished is not dump or surplus energy. * * * They admit that the return of plaintiff from its sales of light and power in their entirety is embraced in the commission's order, and that by the terms of such order plaintiff is permitted to earn 8 per cent. per annum upon the value for rate making purposes found by the commission.

'Answering paragraph XXI, they deny that the order of the Public Service Commission of the state of Washington affects adversely, or at all, any alleged private income of plaintiff arising from the sale of light and power, or that plaintiff has any such alleged private income within the purview of the law. * * * They deny that plaintiff has contracts, income, or business alleged as private which are not subject to the jurisdiction of the commission. These defendants deny, not only the applicability of the case of the State of Washington, on the relation of the Public Service Commission, Respondent, v. Spokane & Inland Empire Railroad. * * * These defendants admit they will, unless enjoined, employ all lawful means to compel compliance with the order of the commission and to subject the entire light and power business of the plaintiff, which they allege to be wholly and in every part a public service and not, as set forth in the bill, composed of public and private business, to the regulation of the commission.

'Answering paragraph XXIII, they admit that, unless lawfully restrained, the Public Service Commission of the state of Washington will proceed to promulgate and enforce a schedule of rates covering the business of the plaintiff in the sale of electrical energy for whatever use, and the whole thereof, no part of which these defendants say is private, or other than a service of the public. They deny that such promulgation and enforcement of a schedule of rates will disrupt the business of the plaintiff and cause it irreparable injury and damage, and they say that the effect on plaintiff's business will be none other than that incident to a change of rates as a result of lawful regulation.'

Defendants further allege:

'That a substantial and very material part of plaintiff's business was and is the service of the public in the distribution, sale, and furnishing of electricity as power and for power purposes, and that the electricity so distributed, sold, and furnished is not dump or surplus energy.'

There is no substantial difference between the case now presented and that made upon the motion, or, if there is, the present is not more favorable to the defendants. Much stress is placed upon the commission's finding, quoted above, that electricity sold and furnished for power purposes 'is not dump or surplus energy. ' That finding weakens rather than strengthens defendants' case. The question whether a use is public in its nature is a judicial question. Const. Wash. art. 1, Sec. 16; Walker v. Shasta Power Co. (9th C.C.A.) 160 F. 856, at page 859, 87 C.C.A. 660, 19 L.R.A. (N.S.) 725.

Energy which is not required for the present needs of a public service is one that may reasonably be called surplus. As said by the Supreme Court of the state of Washington, in speaking of the act of 1911 (Laws 1911, p. 543), in State ex rel. Public Service Commission v. Spokane & Inland Empire Railroad Co., 89 Wash. 599, at page 606, 154 P. 1110, at page 1113 (L.R.A. 1918C, 675):

'There is nothing to indicate a legislative intent to declare that the sale of surplus or secondary power pending a future use by a company in the performance of its public functions is a thing that affects the general welfare, the health, peace, or happiness of the citizen, or that it is in any way necessary to sustain the right of the state to govern.'

If the public service is one that may reasonably be expected to grow, in the exercise of business foresight, the owner of the public service would acquire in advance the power to meet such increased demand, and when acquired it would be held subject to the needs of such public service, and being so held it would, to a degree, be colored by the public service for which it was held. In the present case the plaintiff had a contract with the Puget Sound Power & Light Company, in which it was provided:

'First-- Service.-- Power company agrees to reserve for and furnish to purchaser, during the term of this contract, sufficient electric energy at a nominal potential of 50,000 volts, three-phase, sixty-cycle alternating current, to supply purchaser's requirements of electric energy in the operation of its street railway and lighting and power systems in the city of Everett, Washington, and the town of Lowell, Marysville, and intermediate territory.'

Under such a contract, without more, the electricity used in its power business is not incidental to its public lighting and railway service.

That there was less question in such case than in that of surplus or dump power is recognized by the Supreme Court of the state of Washington in the following cases: State of Washington ex rel. Public Service Commission v. Spokane & Inland Empire Railroad Co., 89 Wash. 599-601, 154 P. 1110, L.R.A. 1918C, 675; Sunset Shingle Co. v. Northwest Electric & Waterworks, 118 Wash. 416, 203 P. 978; State of Washington ex rel. Tacoma Industrial Co. v. White River Power Co. et al., 39 Wash. 648, 82 P. 150, 2 L.R.A. (N.S.) 842, 4 Ann.Cas. 987. Other decisions of the Supreme Court of the state of Washington, not so directly in point perhaps as the foregoing, yet bearing upon the question, are Healy Lumber Co. v. Morris, 33 Wash. 490, 74 P. 681, 63 L.R.A. 820, 99 Am.St.Rep. 964; State ex rel. Harris v. Superior Court, 42 Wash. 660, 85 P. 666, 5 L.R.A. (N.S.) 672, 7 Ann.Cas. 748; State ex rel. Harris v. Olympia L. & P. Co., 46 Wash. 511, 90 P. 656; State ex rel. Tolt Power & Transp. Co. v. Superior Court, 50 Wash. 13, 96 P. 519; State ex rel. Dominick v. Superior Court, 52 Wash. 196, 100 P. 317, 21 L.R.A. (N.S.) 448; Tacoma v. Nisqually Power Co., 57 Wash. 420, 107 P. 199; State ex rel. Lyle Light, Power & Water Co. v. Superior Court, 70 Wash. 486, 127 P. 104; State ex rel. Weyerhaeuser Timber Co. v. Superior Court, 71 Wash. 84, 127 P. 591.

In Walker v. Shasta Power Co., 160 F. 856, at page 861 87 C.C.A. 660, at page 665 (19 L.R.A. (N.S.) 725), the Circuit Court...