Southern Indiana Gas & Elec. Co. v. Cornelison

• Decision Date: 26 July 1978
• Docket Number: No. 778S151,778S151
• Citation: 269 Ind. 71,378 N.E.2d 845
• Parties: SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, Appellant, v. Robert A. CORNELISON, Richard A. Boehning, Chairman of the Indiana State Highway Commission, James F. Dumas, Vice Chairman of the Indiana State Highway Commission, Harold O. McCutchan and Kermit E. Gregory, Members of the Indiana State Highway Commission, Robert F. Marsh, Executive Director, Indiana State Highway Commission, Nicholas Van Nielen, PE, District Engineer, Indiana State Highway Commission, and Herbert S. Howe, Permit Supervisor, Indiana State Highway Commission, Appellees.
• Court: Indiana Supreme Court

Page 845

378 N.E.2d 845

269 Ind. 71

SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, Appellant, v. Robert A. CORNELISON, Richard A. Boehning, Chairman of the Indiana State Highway Commission, James F. Dumas, Vice Chairman of the Indiana State Highway Commission, Harold O McCutchan and Kermit E. Gregory, Members of the Indiana State Highway Commission, Robert F. Marsh, Executive Director, Indiana State Highway Commission, Nicholas Van Nielen, PE, District Engineer, Indiana State Highway Commission, and Herbert S. Howe, Permit Supervisor, Indiana State Highway Commission, Appellees.

No. 778S151.

Supreme Court of Indiana.

July 26, 1978.

Fred P. Bamberger, Jeffrey R. Kinney, Evansville, for appellant; Bamberger, Foreman, Oswald & Hahn, Evansville, of counsel.

William H. Eichhorn, David C. Jensen, Hammond, for amici curiae in support of appellant.

Theodore L. Sendak, Atty. Gen., David O. Finkenbinder, Robert S. Spear, Asst. Attys. Gen., Indianapolis, for appellees.

Sheila S. Suess, Corp. Counsel, Joseph J. Reiswerg, Deputy Corp. Counsel, Indianapolis, for amici curiae in support of appellees.

ON PETITION TO TRANSFER

DeBRULER, Justice.

The Southern Indiana Gas and Electric Company (SIGECO), an Indiana public utility, brought an action in the Knox Circuit Court to enjoin the Indiana State Highway Commission and certain of its agents (commission) from interfering with SIGECO's employees while those employees used the right-of-way areas adjoining state highways. The circuit court denied the requested preliminary injunction and SIGECO appealed the denial to the Court of Appeals. That Court reversed the trial court in an opinion reported at 368 N.E.2d 807. We grant transfer, reverse the decision of the Court of Appeals, and affirm the trial court's denial of the preliminary injunction.

A statute, Ind.Code § 8-13-4-3 (Burns 1973), requires any person seeking to dig up state highways or the adjoining right-of-way areas first to obtain a written permit from the commission. The commission requires applicants for such a permit to post a bond covering the cost of restoring the highway or right-of-way, to agree to numerous conditions under which the work shall be performed, and to agree to indemnify the State for liability arising from injuries or damages caused by the work, even if such liability resulted from the negligence of the State's employees. SIGECO argues that it cannot constitutionally be subjected to the commission's permit requirement because SIGECO enjoys a contractual right against the State to occupy and use state highways for construction and maintenance of utility facilities, which right may not be impaired by the State consistent with the constitutional prohibition against the impairment of the obligation of contracts by the states. U.S.Const. art. 1, § 10, cl. 1.

The historical basis of SIGECO's contractual rights is ably described in the opinion of the Court of Appeals and will not be repeated here. The parties are in substantial agreement as to the status of their respective rights:

The commission admits that the utility possesses a contractual right to make use of land occupied by state highways and their rights of way; and

SIGECO admits that such use is subject to regulation by the State for the safety and convenience of the public by virtue of the State's police power.

The critical issue to the resolution of this case is whether the permit procedure employed by the commission and applied to SIGECO constitutes permissible regulation of SIGECO's use of the highways or amounts to an impermissible impairment of SIGECO's contractual rights. We cannot agree with the Court of Appeals' selection of the latter alternative.

In determining whether the permit procedure is a reasonable regulation of the utility's exercise of its right to use the highways the courts are not free to substitute their own judgments of the wisdom and necessity of such regulation for that of the Legislature and its agencies.

"The central principle developed by (Contract Clause) decisions, beginning at least a century ago, has been that Contract Clause challenges such as that raised by appellant are to be resolved by according unusual deference to the lawmaking authority of state and local governments." United States Trust Co. of New York v. New...