Wis. Tel. Co. v. Pub. Serv. Comm'n

• Decision Date: 15 September 1939
• Citation: 287 N.W. 122,232 Wis. 274
• Parties: WISCONSIN TELEPHONE CO. v. PUBLIC SERVICE COMMISSION (two cases).
• Court: Wisconsin Supreme Court

232 Wis. 274

287 N.W. 122

WISCONSIN TELEPHONE CO.

v.PUBLIC SERVICE COMMISSION (two cases).

Supreme Court of Wisconsin.

July 11, 1939.

Rehearing Denied Sept. 15, 1939.

See 287 N.W. 593.

Appeals from judgments of the Circuit Court for Dane County; August C. Hoppmann, Judge.

Action by the Wisconsin Telephone Company against the Public Service Commission of Wisconsin to set aside a temporary order of 1934 directing the telephone company to reduce its exchange rates and a final order of March 24, 1936, directing the telephone company to reduce its exchange rates. From judgment setting aside the 1934 order and the final order, the Public Service Commission of Wisconsin appeals.-[By Editorial Staff.]

Affirmed.

On August 12, 1930, the Wisconsin Telephone Company, hereinafter called the Company, filed with the Public Service Commission of Wisconsin, hereinafter called the Commission, an application for an increase of its local exchange rates in the city of Madison. A hearing was had on the 4th day of October, 1930, at which time the Company presented an outline of its case. The hearing was continued from time to time and on June 3, 1931, the Commission made an interlocutory order in which it indicated the nature and extent of the proofs which would be required if the Company's application for increase in its rate was to be granted. The Commission having determined to conduct a statewide investigation on July 29, 1931, in the exercise of the power conferred upon it by section 196.28, Wisconsin stats., it made the following findings and order:

“The Public Service Commission therefore finds, That (1) because of the situation revealed by the testimony in the Madison Case, (2) because to hold separate investigations on the complaint of the City of Milwaukee and other municipalities which have filed or may file such complaints would be wasteful of energy, time and money, and (3) by reason of the fact that we believe the state-wide basis for telephone rate-making is the sound and fair one, a state-wide investigation should be made of the rates, rules, service, practices and activities of the Wisconsin Telephone Company.

“The Commission therefore orders, That an investigation and inquiry be, and the same is hereby instituted on the Commission's own motion into the rates, charges, tolls, rules, service, practices and activities of the Wisconsin Telephone Company,

“The Commission further orders, That such investigation shall include the relations of the Wisconsin Telephone Company with affiliated corporations (naming them).

“The Commission further finds, That this proceeding upon our own motion makes necessary an investigation of the books, accounts, practices and activities of the Wisconsin Telephone Company, and an appraisal of the property of the Wisconsin Telephone Company, and it is hereby ordered, That the expenses reasonably attributable to such investigation and appraisal will be assessed against and charged to the Wisconsin Telephone Company, under authority of Section 196.85(1) of the Wisconsin Statutes.

“Notice is hereby served upon the Wisconsin Telephone Company of our finding of necessity for such investigation.”

Thereafter hearings were noticed and hearings were continued from time to time and on June 30, 1932, the Commission made and filed an opinion and interlocutory order directing the Company to reduce its exchange rates 12 1/2% for one year, which order by its terms became effective August 1, 1932.

On July 5, 1933, a similar opinion and interlocutory order was issued by which the Company was directed to reduce its exchange rates 12 1/2% for one year from the date of the expiration of the 1932 order.

On July 5, 1934, the Commission made and filed a third opinion and order directing a reduction in exchange rates of 10%. This order was to become effective upon the expiration of the 1933 order and was to continue in effect for the period of one year.

On March 24, 1936, the Commission made and filed its opinion and made an order known as the final order which directed a reduction in exchange rates of 8%. This order became effective on May 1, 1936.

Between August 1, 1935, and May 1, 1936, no order reducing rates was in force.

The plaintiff brought actions in the Federal Court to set aside the 1932 and 1933 orders. The Company began an action in the circuit court for Dane County to set aside the interlocutory order of July 5, 1934, which will hereafter be referred to as the 1934 order. It also began an action in the circuit court for Dane County to set aside the order of March 24, 1936, which order will hereafter be referred to as the final order. The action to set aside the 1934 order and the action to set aside the final order were brought and tried together in the circuit court. Additional testimony was taken in the circuit court and in accordance with the provisions of the statute, sec. 196.44, the record was referred back to the Commission to enable it to consider the additional testimony produced in circuit court. The Commission in addition to considering the testimony produced in circuit court received further evidence and upon reconsideration of all the evidence reaffirmed the 1934 order and the final order and so reported to the circuit court.

On February 23, 1938, judgment of the circuit court was entered setting aside the 1934 order and the final order, from which judgments the Commission appeals.John E. Martin, Atty. Gen., and Harold M. Wilkie, Special Counsel, Philip H. Porter, Chief Counsel, and Daryal A. Myse, Counsel, all of Madison, for appellant.

Miller, Mack & Fairchild, T. C. Bolliger, and Frederic Sammond, all of Milwaukee, for respondent.

ROSENBERRY, Chief Justice.

Upon this appeal the questions presented fall into two general classes: (1st) those relating to procedure and due process, and (2d) those relating to the merits or a consideration of the rate base, a fair rate of return, and the income of the Company. We shall first consider those relating to procedure. It may be said at this point that the classification is not accurate and there is some overlapping.

Procedure

Among other things, the trial court found:

“53. That the acts of the commission in the conduct of the proceedings before it, and the orders made in the proceedings, evidenced manifest unfairness, bias and a lack of judicial attitude on the part of the commission against the plaintiff.

“54. That many of the issues decided against the plaintiff in the Final Order had been prejudged by the commission in temporary orders issued in the same proceeding without adequate hearing, and on incomplete evidence from the commission's staff and prior to the receipt of plaintiff's evidence therein or the completion of its cross-examination.

“55. That during the course of the commission proceedings, there were prepared by members of the commission's staff, with its knowledge and approval, summaries of exhibits and statements setting forth prospective testimony of the commission's witnesses, phrased as if already given, which summaries and statements the commission customarily made available and delivered to representatives of the press, before the hearings at which such evidence was offered.

“56. That substantially all of the Final Order, and of the prior temporary rate orders, were drafted by members of the staff of the commission, which members had been investigators and witnesses on behalf of the commission and against the plaintiff on the same subjects with which they respectively dealt in writing said orders.

“57. That no commissioner attended all of the hearings and frequently successive hearings were presided over by different commissioners. That none of the commissioners examined all of the evidence in the proceedings prior to the issuance of the Final Order.

“58. That plaintiff repeatedly requested and was by the commission denied information as to the nature of contemplated orders, including the final order, and upon what grounds orders were proposed and what field was to be covered by them, as well as what changes were contemplated in the expense and investment data which were contained in the books of the plaintiff.”

And upon this branch of the case, the trial court concluded as a matter of law:

“IV. That the presumptions contained in section 196.40 and in section 196.46 of the Statutes of Wisconsin in favor of the validity of all actions by the commission have been destroyed in this case by the failure of the commission to give the plaintiff a fair hearing and to conduct the proceedings in an unbiased and unprejudicial manner as is required by the Constitutions and the statutes. That said presumptions do not in any case apply to instances in which material errors of law are embodied in or underlie the commission's conclusions or the evidence on which such conclusions are based. However, all findings of fact and all other conclusions of law herein have been made as if said presumptions were in force.

“V. That the Final Order was issued without fair hearing and with such bias and prejudicial conduct by the commission that the order deprives the plaintiff of property without due process of law and denies to the plaintiff the equal protection of the law in violation of the Constitutions of the United States and of the State of Wisconsin.

“VI. That the Final Order is unreasonable and unlawful because of failure to give the plaintiff the fair hearing to which it was entitled under section 196.26 of the statutes, and also because the order was not based upon an examination by the commission itself of testimony and records taken before a single commissioner or agent as required by section 196.24 (3) of the statutes.”

The Commission contends with respect to the findings of fact and conclusions of law relating to procedure and due process: (1st) that in this statutory proceeding the court had no jurisdiction to set aside the orders of the Commission on the ground of lack of due process in the proceedings before the...