Valparaiso Lighting Company v. Public Service Commission of Indiana

• Decision Date: 17 December 1920
• Docket Number: 23,511
• Citation: 129 N.E. 13,190 Ind. 253
• Parties: Valparaiso Lighting Company v. Public Service Commission of Indiana
• Court: Indiana Supreme Court

129 N.E. 13

190 Ind. 253

Valparaiso Lighting Company v. Public Service Commission of Indiana

No. 23,511

Supreme Court of Indiana

December 17, 1920

Rehearing Denied March 10, 1921.

From Laporte Circuit Court; James F. Gallaher, Judge.

Action by the Valparaiso Lighting Company against the Public Service Commission of Indiana. From the judgment rendered, the plaintiff appeals.

Reversed.

Edgar D. Crumpacker, Grant Crumpacker and Owen L. Crumpacker, for appellant.

Ele Stansbury and U. S. Lesh, Attorneys-General, Perry L. Sisson and Edward M. White, for appellee.

OPINION

Willoughby, C. J.

This action was begun in the Porter Superior Court by the appellant as plaintiff against the appellee as defendant, to vacate, set aside and enjoin the enforcement of an order of appellee, the Public Service Commission of Indiana, fixing and establishing rates which appellant might charge consumers of electrical current, also fixing a valuation upon the appellant's electrical system in the city of Valparaiso. The case reached the Laporte Circuit Court on a change of venue. The judgment was rendered in favor of appellee, and this appeal is prosecuted from that judgment.

The appellant filed its complaint in the Porter Superior Court to set aside and vacate the order of the Public Service Commission. The complaint reviews the proceedings and order of the commission establishing rates and fixing a valuation upon appellant's plant and distributing system, and alleges that the order of the commission fixing rates and establishing such valuation is void and unreasonable for the reasons stated therein.

The appellee filed an answer to the complaint consisting of a general denial to each and every allegation thereof. After the cause had been transferred to the Laporte Circuit Court the appellee filed an additional or supplemental answer. This supplemental answer sets up in substance that the order of the commission was made pursuant to petition filed by customers of appellant asking for a reduction in rates for electric lighting, and that a petition asking for an increase in rates for both gas and electricity was filed by the appellant. The petitions were tried together, and the commission entered an order fixing a valuation upon appellant's electrical property and reducing rates in connection therewith, and as a part of the same order appellant was permitted to add a surcharge of ten per cent for gas, and has been collecting said increased rates from its various customers, and that thereby it was estopped from denying the validity of the order or any portion thereof. To this supplementary answer the plaintiff filed a reply of general denial. The cause was submitted to the court for trial without the intervention of a jury. The appellant requested the court to make a special finding of facts and conclusions of law, which request was overruled by the court. The finding of the court was a general one and was for the appellee, and that the appellant take nothing. The judgment of the court followed the finding and affirmed the order of the commission.

Appellant filed a motion for a new trial, which was overruled by the court, and it is to review these various rulings of the court that this appeal is prosecuted.

It appears from the record that the city of Valparaiso is now and has been for many years a municipal corporation and is what is known and designated under the statutes of the state as a city of the fifth class. The appellant, Valparaiso Lighting Company, is a corporation duly organized and existing under and by virtue of the laws of the State of Indiana, and was incorporated some time during the year of 1905. About the time of its incorporation, or shortly thereafter, it acquired by purchase the electric lighting and gas systems in the city of Valparaiso, and has since been operating said gas and electric systems. Up to November, 1913, appellant operated in said city under franchises theretofore granted to it by the common council of the city, and on the last-named date it surrendered to the Public Service Commission all of its franchises under which it had been previously operating and thereafter operated and is now operating under what is termed in the Public Service Law an indeterminate permit.

On October 6, 1915, ten persons filed a petition with the commission, asking that the rates for electricity for residence lighting in the city of Valparaiso be reduced, and averring that appellant was charging ten cents per kilowatt hour for electric current for lighting purposes and that such charge was unreasonable, and also that it charged $ 1 per month for "meter rent" or "readiness to serve" charge; that the last-named charge was made for no service rendered, and no electricity was furnished for said charge; that said charge was unreasonable and unwarranted.

The petition was based solely on these two grounds: First, that the charge for residence lighting was too high; and second, that the charge for meter rental, or so-called "readiness to serve," was unreasonable and was for no service that was in fact performed or furnished by appellant to its customers. This petition was designated by the secretary of the commission as cause No. 1848. Afterwards, on August 3, 1917, appellant filed a petition with the commission asking that it be permitted to add a temporary surcharge on all bills for gas and electricity of thirty per cent. of the amount thereof. This was filed by the commission as petition No. 3312. These petitions were heard at the same hearing. No formal order of the commission was entered consolidating the causes and no reference thereto is made in the proceedings of the commission except in the final order or opinion of the commission. The fact of the filing of the respective petitions is there mentioned, and it is also stated that the causes had been consolidated for the purpose of a hearing, but there is nothing in the record to show the consolidation of said causes for any other purpose.

While the order of the commission is embraced in a single document, it in fact considers the gas and electrical propositions separately, and fixes a separate valuation on appellant's gas and electric plants and distributing systems and establishes a new schedule of rates to be charged by appellant for electricity consumed which amounts to a reduction of thirty to forty per cent. from the prior schedule of rates. With reference to the gas proposition the order grants appellant. permission to charge temporarily a surcharge of ten per cent. on all bills for gas furnished after May 1, 1918.

The physical valuation fixed by the commission upon appellant's electric property is $ 75,000. The new schedule of rates established by the commission is based upon this valuation. Certain so-called abandoned property of appellant, which was appraised by the commission's engineer at $ 13,721, is not included in the valuation fixed by the commission upon appellant's electric property for rate-making purposes, the claim being made that such property was neither used nor useful in the service furnished by appellant. It appears from the evidence before the commission and from the opinion of the commission, that the appellant entered into a contract with the Northern Indiana Gas and Electric Company, by the terms of which the latter company furnishes electric current to appellant for use in supplying customers in the city of Valparaiso. This contract was made in 1911, and runs for ten years. After the contract was entered into appellant practically ceased to use the so-called abandoned property, which consisted of its local electrical plant and generating system. Appellant's contract for electrical current provides for a payment therefor amounting to approximately two cents per kilowatt hour, and the decision of the commission is based largely upon the fact that this contract was very advantageous to appellant, and that by reason thereof it was fortunately situated. The decision appropriates all of the benefits growing out of said contract to the public and does not allow anything to appellant on account thereof. Neither is any valuation fixed nor allowed thereon for the purpose of rate making, and it further appears that the so-called abandoned property was abandoned to enable appellant to take advantage of the terms and provisions of said contract. In other words, after entering into said contract, it ceased to use its generating plant and system which, as stated, was appraised at the sum of $ 13,721, and thereafter it obtained its electric current by a transmission line from the city of Michigan City, so that for the purpose of rate making no valuation was fixed on the alleged abandoned property, neither was any valuation fixed on the favorable contract which appellant had with the Northern Indiana Gas and Electric Company. Appellant's contention is that the contract that it has with the Northern Indiana Gas and Electric Company was entered into in September, 1911, before the enactment of the Public Service Law, and that the rights conferred upon appellant by virtue of that contract were valuable property rights which belonged to it, and that such contract was an asset to appellant, and that when thereafter, to wit, November 20, 1913, it surrendered its franchise and operated thereafter under an indeterminate permit, it did not surrender any of its property rights, including the contract with the Northern Indiana Gas and Electric Company, and that appellant was entitled to have a valuation fixed on said contract or its rights thereunder for rate-making purposes and rates established accordingly.

The trial court also refused to admit evidence showing the value of the contract that appellant had with the Northern Indiana Gas and Electric Company,...