Wis. Power & Light Co. v. Pub. Serv. Comm'n

• Citation: 219 Wis. 104,261 N.W. 711
• Court: United States State Supreme Court of Wisconsin
• Decision Date: 24 June 1935
• Parties: WISCONSIN POWER & LIGHT CO. v. PUBLIC SERVICE COMMISSION.

219 Wis. 104

261 N.W. 711

WISCONSIN POWER & LIGHT CO.

v.PUBLIC SERVICE COMMISSION.

Supreme Court of Wisconsin.

June 24, 1935.

Appeal from a judgment of the Circuit Court for Dane County; A. G. Zimmerman, Circuit Judge.

Affirmed.

Action by the Wisconsin Power & Light Company against the Public Service Commission of Wisconsin to review an order of the commission made in proceedings by a municipality to take over an electrical service utility operating therein. From a judgment entered November 27, 1934, affirming the fixing of compensation, the plaintiff appeals.

The plaintiff is a public utility supplying 300 communities of the state with electrical energy. It supplies 275 municipalities and their inhabitants directly as a local public utility by virtue of ownership of the distribution system therein and of an indeterminate franchise granting it the exclusive right to furnish such service. The remaining communities are served by the municipality itself or other local public utilities operating therein under an indeterminate franchise, to whom the plaintiff supplies current wholesale. One of the communities it was serving directly at the time of the institution of the proceedings hereinafter mentioned is the village of Brooklyn. This village in 1917 granted to the Brooklyn Electric Light & Power Company an indeterminate franchise under the general public utility law of the state under which the owner of the franchise has the exclusive right to furnish electrical service within the village until the municipality elects to exercise the power conferred by section 197.01 (3), Stats., subject to other statutory provisions, “to acquire the property of any public utility, wheresoever situated, actually used and useful for the convenience of the public.” The village of Brooklyn in 1931 elected to acquire the property of the local utility that the said statute empowered it to acquire, and regularly took all steps prerequisite to its acquisition. Section 197.05 (2), Stats., provides that when a municipality elects to acquire property of a utility under said section 197.01 (3), and has taken the prescribed steps, the Public Service Commission upon notice and hearing shall “by order, fix and determine * * * just compensation to be paid for the taking of the property of such public utility actually used and useful for the convenience of the public and all other * * * conditions of purchase which it shall ascertain to be reasonable,” and “the compensation and other * * * conditions of purchase” thus found “shall constitute the compensation and terms and conditions to be paid, followed and observed in the purchase of such plant from such public utility.” The order designated the property to be taken over as the distribution system within the village and one short line connected with a distribution line in the village that served two farmers outside the village.

The plaintiff purchased the franchise and property of said Brooklyn Electric Light & Power Company in 1925. The property so purchased consisted of a power plant and a distributing system. After the purchase the plaintiff discarded the power plant and connected the distribution system with its highpower line which is supplied with current from several generating plants; some operated by steam and others by water power. All these generating plants are connected into one unified transmission system. This unified system of high-power lines supplies all the current used by the several communities served by the plaintiff whether supplied wholesale or retail. Among the retail consumers are many farming communities not within a municipality served by a local utility. The aggregate value of the steam and hydroelectric plants supplying the unified transmission lines is about $19,000,000; the value of the unified transmission high lines, $13,275,000; that of the local distributing systems, not including rural lines owned by the plaintiff, $8,340,000; and that of its rural lines $3,400,000; a total of $44,000,000. There have been progressive extensions of the transmission high lines and addition to the power plants since the plaintiff acquired the local utility at Brooklyn, and their total value is now much greater than it was then.

Pursuant to proceedings had under said statutes, the Public Service Commission by order determined what property should be taken over by the village pursuant to its election, and that $10,000 was just compensation for such property. This sum comprises the value of the physical property taken and the “going value” of the local utility. The plaintiff insisted before the commission that in addition to these items it was entitled to have assessed and paid what it designates as “severance damages,” and because of denial of these damages the plaintiff brought action in the circuit court to review the order of the commission. The court upon hearing affirmed the order of the commission, and the plaintiff appeals from the judgment of affirmance. Such other matters as are deemed material will be stated in the opinion.

Schubring, Ryan & Petersen and Ralph E. Axley, all of Madison, for appellant.

James E. Finnegan, Atty. Gen., H. T. Ferguson, Sp. Asst. Atty. Gen., and Alvin C. Reis, Chief Counsel, Public Service Commission, of Madison, for respondent.

FOWLER, Justice.

As we understand its contention, the plaintiff is not objecting to the aggregate value fixed by the commission for the physical property taken over by the village and the “going value” of the utility, but is only contending that the commission erred in not including, in the compensation awarded, damages for the diminution in value of its property as a whole by reason of the taking of the portion taken. It urges that the proceeding is a condemnation proceeding, and that the same measure of damages therefore should be applied that is applied in the condemnation of property for railroad or highway or other public purposes which admittedly is the difference between the value at the time of taking of the whole property of which the property taken is a part and the value of the remaining property as a whole after the taking of the portion taken.

From this as its premise, the plaintiff argues, in effect, that if the municipalities it serves as local utilities progressively take over the distributing systems therein, it will eventually be deprived of all of its property except its main steam power plants and its hydroelectric plants, the total value of which is about $17,000,000; that with its distribution systems all gone, these plants will be left on its hands with nothing to serve, will be rendered valueless, and it will thus be deprived of its property without just compensation and without due process of law, contrary to the terms of section 13, art. 1 of the State Constitution and the Fourteenth Amendment to the Constitution of the United States. It argues further, that to avoid this dire result, each municipality should pay such proportionate part of the total value of its several power plants and transmission lines that will thus be rendered valueless, as is fixed either by the ratio of the value of the distributing system therein to the total value of all of the plaintiff's distributing systems, or the ratio of the consumption of electrical energy by the local utility to the total consumption by all of its local utilities. On this or some other hypothetical basis the plaintiff contends that under the evidence introduced before the commission the village of Brooklyn should pay at least $56,000 as compensation in addition to the $10,000 awarded by the commission.

The respondent contends that the proceeding before the commission is not a condemnation proceeding, but a purchase, and that the compensation recoverable rests upon a contractual basis. It argues that the statute expressly provides that the plaintiff shall be compensated for the property taken, and that such loss if any as it may suffer in the future through further acquisition by municipalities of the local utility therein and their property will be a mere loss of business, the risk of which the plaintiff took when it purchased the local utility and property. The respondent further argues that had the village of Brooklyn taken over the property of the original grantee of the indeterminate franchise, it would have been required to pay only the value of the property taken; and that the plaintiff cannot add to the amount it must pay by tying the local distribution system up to its unified power and transmission system. The respondent further argues that villages like Brooklyn, with a population of about 400 and a local assessed property valuation of $360,000, manifestly cannot pay $66,000 for the privilege of taking over the local utilities operating therein. This would render acquisition by such municipalities impossible, deprive them of a plain statutory right, and defeat the plain import and intent of the statute.

[1] As to the respective contentions of the parties as to the nature of the proceeding involved, it is perhaps sufficient to say that the proceeding is not necessarily purely a condemnation proceeding, imposing the precise measure of compensation ordinarily allowed in such proceedings, or purely a purchase with the measure of compensation involved resting entirely on a contractual basis. The first case dealing expressly with the nature of the proceeding involved in the acquisition under the public utility law by a municipality of the property of a local utility is Connell v. Kaukauna, 164 Wis. 471, 159 N. W. 927, 160 N. W. 1035, Ann. Cas. 1918A, 247. It was there declared to be in the nature of a condemnation proceeding; that the acceptance of an indeterminate franchise is a waiver by the utility of the jury verdict prescribed by section 2, art. 11, of the State Constitution which makes a finding by a jury of the necessity of taking prerequisite to a municipality's taking of property for a public purpose; and...