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

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtOWEN
Citation240 N.W. 411,206 Wis. 589
Decision Date12 January 1932
PartiesWISCONSIN TELEPHONE CO. v. PUBLIC SERVICE COMMISSION OF WISCONSIN ET AL.

206 Wis. 589
240 N.W. 411

WISCONSIN TELEPHONE CO.
v.
PUBLIC SERVICE COMMISSION OF WISCONSIN ET AL.

Supreme Court of Wisconsin.

Jan. 12, 1932.


Appeal from an order of the Circuit Court for Dane County; August C. Hoppmann, Circuit Judge. Reversed.

This action was commenced by the Wisconsin Telephone Company on the 21st day of September, 1931, against the Public Service Commission, Theodore Kronshage, Jr., David E. Lilienthal, and A. R. McDonald, as Commissioners composing said Commission, and William M. Dinneen, as Secretary of said Commission. From an order overruling a demurrer to the complaint, entered on the 5th day of October, 1931, the defendants appeal.

[240 N.W. 411]

John W. Reynolds, Atty. Gen. (David E. Lilienthal, of Madison, and Benjamin Poss, Sp. Counsel, of Milwaukee, of counsel), for appellants.

Miller, Mack & Fairchild, J. F. Krizek, and J. G. Hardgrove, all of Milwaukee, for respondent.


OWEN, J.

This appeal presents the question of the constitutionality of section 196.85, Stats., which was enacted by chapter 183, Laws 1931, and amended by chapter 475, Laws 1931. This act imposes upon the public utilities the expense resulting from their regulation by the state. In the first place, it requires the individual utility examined or investigated by the Public Service Commission, pursuant to its powers, to pay the expenses reasonably attributable to such investigation, appraisal, or service; “provided, however, that the commission may exempt and relieve such public utility, power district, or railroad from the duty of paying such expenses, or a portion thereof, but only upon a finding that the public interest requires that such public utility, power district, or railroad be thus exempted and relieved, in which event such expenses shall not be chargeable as a part of the remainder described in subsection (2) of this section.” By subsection (2) of the section the commission is required, within ninety days after the close of each fiscal year, to ascertain the total of its expenditures during such year which are reasonably attributable to the performance of its regulatory duties, and to deduct therefrom all amounts collected directly from the utility investigated or examined, and to assess the remainder to the several public utilities, power districts, street and interurban railways, in proportion to their respective gross operating earnings during the last calendar year, and requires the public utilities so assessed to make payment of such assessments within a specified time.

It appears from the complaint that on or about July 29, 1931, the defendant commission instituted a state-wide investigation of the affairs of the plaintiff, and on September 12, 1931, sent the plaintiff a tentative bill setting out certain expenses which it proposed to assess against the plaintiff under

[240 N.W. 412]

section 196.85. This action was brought to restrain the Public Service Commission from making said assessment on the ground that said act is unconstitutional.

[1] There is a general challenge on the part of the plaintiff to the power of the Legislature to impose upon the public utilities of the state the cost of their regulation. We think such power undoubtedly resides in the Legislature. It is a well-settled principle that the cost of regulating and supervising certain businesses may be imposed upon such businesses so long as the amount imposed does not exceed the reasonable cost of regulation and so far as the power is not prostituted to the purpose of raising general revenue. Wisconsin Telephone Co. v. Milwaukee, 126 Wis. 1, 104 N. W. 1009, 1 L. R. A. (N. S.) 581, 110 Am. St. Rep. 886;Wadhams Oil Co. v. Tracy, 141 Wis. 150, 123 N. W. 785, 18 Ann. Cas. 779;City of Milwaukee v. Milwaukee Electric Railway & Light Co., 147 Wis. 458, 133 N. W. 593;Milwaukee Electric Railway & Light Co. v. Milwaukee, 167 Wis. 384, 167 N. W. 428. This is the theory upon which a license fee is exacted of pawnbrokers, peddlers, and other businesses requiring police and other governmental supervision. It is the principle upon which insurance companies are required to pay the cost of investigation made by the insurance department, and upon which banks are made to bear at least a portion of the expense incident to their examinations by the banking department. In Charlotte, etc., R. Co. v. Gibbes, 142 U. S. 386, 12 S. Ct. 255, 35 L. Ed. 1051, a law of the state of South Carolina imposing upon the railroads of that state the cost of their regulation by the Railroad Commission, was expressly approved. In that case it was pointed out that the expense thus imposed upon the railroad companies was analogous to that imposed upon vessels for examination under the quarantine laws, which provision is a part of all quarantine systems.

[2][3][4][5] It is well settled in this country that the regulation of public utilities is a necessary governmental function, and no reason is seen why the state may not impose upon them the expense of regulation. Public utilities cannot function as such except as they receive a franchise from the state, and the state, as a condition of granting the franchise, may impose upon them the cost of regulation. Fox River Paper Co. v. Railroad Commission of Wisconsin, 274 U. S. 651, 47 S. Ct. 669, 71 L. Ed. 1279. If it be objected that it is beyond the power of the state to impose such condition upon them after the franchise is granted, then it may be answered that, under the power to alter, amend, or repeal corporate charters, contained in section 1, art. 11, of the Constitution, furnishes abundant power to the Legislature to impose such reasonable burdens as an amendment to the charters of such corporations. Superior W., L. & P. Co. v. Superior, 174 Wis. 257, 181 N. W. 113, 183 N. W. 254. While the public utility law does not confine the right to exercise the functions of a public utility to corporations, it probably is a fact that those who act as such outside of corporations are inconsequential in number. At any rate, the corporation cannot complain if it is treated similarly to all other corporations engaged in the same business. As a corporation, it cannot act at all except with the consent of the Legislature, and in authorizing it to act the Legislature may impose upon it such conditions as it may see fit, no matter how harsh such conditions may be, and after organization it may impose a condition so reasonable as the one here imposed under its authority to amend corporate charters. While the above challenge to the law has been made, we cannot feel that it was presented with any great assurance that it is of substantial merit.

[6] But the law is challenged with far greater vigor upon another ground, a ground that does not go to the fundamental power and authority of the Legislature to impose upon the utilities of the state the cost and expenses of their regulation.

Attention is called to the fact that the...

To continue reading

Request your trial
15 practice notes
  • Wilhoit v. City of Springfield, No. 6370.
    • United States
    • Court of Appeal of Missouri (US)
    • May 3, 1943
    ...1165; Charlotte, Columbia & Augusta Ry. Co. v. Gibbs, 142 U.S. 386, 35 L. Ed. 1051; Wisconsin Tele. Co. v. Pub. Serv. Comm. of Wisconsin, 240 N.W. 411; State v. Wisconsin Constructors, 268 N.W. 238; Morf v. Bingaman, 298 U.S. 407, 80 L. Ed. 1245, 42 C.J. 546; American Baseball Club v. City ......
  • Attorney General of Maryland v. Waldron, No. 45
    • United States
    • Court of Appeals of Maryland
    • March 13, 1981
    ...was accomplished independent of any authorization or predomination by any other department of government. See State v. Cannon, 206 Wis. 589, 240 N.W. 441, 445-48 (1932), and In re Day, 181 Ill. 73, 54 N.E. 646, 648-50 (1899), and citations therein, for discussions of the history of the admi......
  • Ashland Transfer Co. v. State Tax Commission
    • United States
    • Court of Appeals of Kentucky
    • December 16, 1932
    ...to those already cited, sustaining the principles herein announced, are Wisconsin Telephone Co. v. Public Service Commission of Wisconsin, 206 Wis. 589, 240 N.W. 411, and United States v. Shreveport Grain & Elevator Co., 53 S.Ct. 42, 77 L.Ed. 175. Counsel cite and rely on a number of domest......
  • Ashland Transfer Co. v. State Tax. Comm.
    • United States
    • United States State Supreme Court (Kentucky)
    • December 16, 1932
    ...to those already cited, sustaining the principles herein announced, are Wisconsin Telephone Co. v. Public Service Commission of Wisconsin, 206 Wis. 589, 240 N.W. 411, and United States v. Shreveport Grain & Elevator Co., 53 S. Ct. 42, 77 L. Ed. ___. Counsel cite and rely on a number of dome......
  • Request a trial to view additional results
15 cases
  • Wilhoit v. City of Springfield, No. 6370.
    • United States
    • Court of Appeal of Missouri (US)
    • May 3, 1943
    ...1165; Charlotte, Columbia & Augusta Ry. Co. v. Gibbs, 142 U.S. 386, 35 L. Ed. 1051; Wisconsin Tele. Co. v. Pub. Serv. Comm. of Wisconsin, 240 N.W. 411; State v. Wisconsin Constructors, 268 N.W. 238; Morf v. Bingaman, 298 U.S. 407, 80 L. Ed. 1245, 42 C.J. 546; American Baseball Club v. City ......
  • Attorney General of Maryland v. Waldron, No. 45
    • United States
    • Court of Appeals of Maryland
    • March 13, 1981
    ...was accomplished independent of any authorization or predomination by any other department of government. See State v. Cannon, 206 Wis. 589, 240 N.W. 441, 445-48 (1932), and In re Day, 181 Ill. 73, 54 N.E. 646, 648-50 (1899), and citations therein, for discussions of the history of the admi......
  • Ashland Transfer Co. v. State Tax Commission
    • United States
    • Court of Appeals of Kentucky
    • December 16, 1932
    ...to those already cited, sustaining the principles herein announced, are Wisconsin Telephone Co. v. Public Service Commission of Wisconsin, 206 Wis. 589, 240 N.W. 411, and United States v. Shreveport Grain & Elevator Co., 53 S.Ct. 42, 77 L.Ed. 175. Counsel cite and rely on a number of domest......
  • Ashland Transfer Co. v. State Tax. Comm.
    • United States
    • United States State Supreme Court (Kentucky)
    • December 16, 1932
    ...to those already cited, sustaining the principles herein announced, are Wisconsin Telephone Co. v. Public Service Commission of Wisconsin, 206 Wis. 589, 240 N.W. 411, and United States v. Shreveport Grain & Elevator Co., 53 S. Ct. 42, 77 L. Ed. ___. Counsel cite and rely on a number of dome......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT