Wis. Traction, Light, Heat & Power Co. v. City of Menasha

• Decision Date: 03 February 1914
• Citation: 145 N.W. 231,157 Wis. 1
• Court: Wisconsin Supreme Court
• Parties: WISCONSIN TRACTION, LIGHT, HEAT & POWER CO. v. CITY OF MENASHA.

157 Wis. 1

145 N.W. 231

WISCONSIN TRACTION, LIGHT, HEAT & POWER CO.

v.CITY OF MENASHA.

Supreme Court of Wisconsin.

Feb. 3, 1914.

Appeal from Circuit Court, Winnebago County; Geo. W. Burnell, Judge.

Action by the Wisconsin Traction, Light, Heat & Power Company against the City of Menasha. Judgment for defendant, and plaintiff appeals. Reversed.

In the year 1904 the plaintiff was a public service corporation, and was engaged, among other things, in the business of furnishing light and electric energy to municipalities and private consumers. On March 23d of this year the defendant granted plaintiff a franchise to erect poles and string wires thereon in the city, and to furnish electric light and power to those desiring to use same. The franchise specified the rates to be charged for current, for incandescent and arc lamps, and for power. In the ordinance the city reserved the right to erect and maintain a competing plant for private lighting. It was expressly provided that the ordinance should not become effective unless, within 30 days after its passage and publication, the same was accepted, and an express waiver was filed with the city clerk of all rights the plaintiff might have to object to the establishment of a commercial lighting plant by the city. Such acceptance and waiver were filed. The plaintiff constructed the necessary lines to supply private consumers, and also furnished current for street lighting until the city constructed a plant of its own for this purpose.

About September 27, 1905, the city council passed a resolution reciting that it appeared that electric light could be furnished to the city of Menasha for the use of said city and its inhabitants more economically and with better service than the same was then being supplied, and that, in the judgment of the council, such light could be most economically supplied by works owned by the city, and that the best interests of the city called for the building of said works. The resolution further recited that it appeared from estimates obtained by the council that such works could be built at a cost of not exceeding $10,000, and, it appearing that the city had power under chapter 143 of the Laws of 1901 to build such works, it was resolved that the city build light works to supply the city and its inhabitants with light. A special election was provided for to vote on the proposition, and it was carried by a large majority.

On November 28, 1905, the city notified the plaintiff that it was about to install a plant to light its streets, but that such plant would not be ready for 60 days, and that in the meantime it would expect the plaintiff to continue lighting the streets according to the terms of its franchise. On January 2, 1906, the plaintiff was notified to cease furnishing current to the city 30 days thereafter. Since February 1, 1906, the city has done its street lighting. Whatever may have been the expectations of the city in respect to the adequacy of its plant, it proved to be wholly inadequate to supply current for commercial lighting. The building was built large enough to accommodate an additional engine for light work. It was thought, after the plant was built, that it had sufficient capacity to supply private consumers with light to some extent, so about June, 1906, a resolution was passed authorizing the committee on water and light to make immediate arrangements for supplying private consumers with light, and for entering on a commercial lighting business in the city of Menasha, and for such purpose it was instructed to procure the necessary transformers and other equipment. In pursuance of this action about 620 feet of wire for commercial lighting was strung in 1906, and a small amount of current was for a time supplied to two or three private consumers. A fourth was supplied for a couple of days; but service was discontinued because of lack of power to generate the necessary current.

The plant installed consisted of a generator, switchboard, and necessary transformers and poles; the number of transformers purchased not exceeding 3. The wires for private lighting were strung to the store building used by the then mayor, and also to the upstairs of the building, and to the residence of the mayor's partner some 20 feet from the store. The number of lights was from 15 to 25, and the revenue received therefrom was about $30. The service was begun about the middle of the year 1906, and discontinued about June, 1908, because the plant was unable to furnish the current. The machinery used seems to have been installed in the waterworks plant, and it rather appears by inference that the engine used for the pumping plant was used to generate electricity also. From June or July, 1908, until the latter part of the year 1911 the city furnished no light to any private consumer.

On February 21, 1911, the city passed a resolution to borrow $40,000, to be used for the purpose of enlarging its lighting plant. On July 18, 1911, the city authorized the purchase of additional equipment for its lighting plant, and on October 19, 1911, it passed an ordinance providing for the issuance and sale of bonds to the amount of $40,000 to purchase additional equipment for the plant. The bonds were sold, and the city proceeded to provide the necessary equipment to engage in the commercial lighting business. The plaintiff brings this action to restrain the city from so doing, and, from a judgment in defendant's favor, it prosecutes this appeal.

Timlin and Kerwin, JJ., dissenting.Van Dyke, Rosecrantz, Shaw & Van Dyke, of Milwaukee, for appellant.

D. K. Allen, of Menasha (Silas Bullard and Henry Fitzgibbon, both of Menasha, of counsel), for respondent.

BARNES, J. (after stating the facts as above).

[1] For many years prior to 1907 the plaintiff was a public utility. It did not elect to surrender its franchises, and to take in lieu thereof the indeterminate permit provided for by the public utilities law of 1907 (chapter 499), section 1797m1, Stats., and succeeding sections.

Chapter 596, Laws of 1911, was published and became effective on July 8, 1911. This act in effect provided that any franchises theretofore granted to a public utility by the state, or through any of its agencies, was so altered and amended as to constitute and be an indeterminate permit within the terms and meaning of sections 1797m1 to 1797m108, inclusive, of the Statutes of 1898, and subject to all the terms, provisions, conditions, and limitations of said sections. The amended franchise is given the same force and effect as a license, permit, or franchise granted after July 11, 1907, to any public utility, subject to the provisions of the public utilities law of 1907.

Section 1797m74--3, being part of the public utilities act, provides: “No municipality shall hereafter construct any such plant or equipment where there is in operation under an indeterminate permit as provided in this act, in such municipality a public utility engaged in similar service, without first securing from the commission a declaration, after a public hearing of all parties interested, that public convenience and necessity require such municipal public utility.”

The appellant contends that by force of said chapter 596, Laws of 1911, it received an indeterminate permit in lieu of the existing franchises under which it operated, and became subject to the public utilities law to the same extent that it would have become subject thereto had it surrendered its franchises under the 1907 law, and elected to receive in lieu thereof an indeterminate permit as provided by chapter 499, Laws of 1907 (section 1797--77). The plaintiff being subject to the public utilities act after July 8, 1911, it insists that it was unlawful for the defendant city to engage in the business of commercial lighting after that date without a certificate of convenience and necessity from the Railroad Commission, and it is conceded that no such certificate was procured, and it appears by inference that none was asked for.

The defendant insists that it had the right to proceed without any certificate from the Railroad Commission for the following reasons: (1) The clause in the franchise granted the plaintiff in 1904 by which the defendant expressly reserved to itself the right to engage in the business of commercial lighting is still in force, and in any event, the plaintiff having accepted such franchise with the provision referred to, it should not now be heard to object to the right of the city to exercise the privilege so reserved. (2) By a resolution passed February 21, 1911, the city, as it had the right to do at that time, evinced an intention to enlarge its plant so as to engage in the business of commercial lighting, and it should be held that thereafter the city became a public utility in the business of commercial lighting. (3) The city was in fact a public utility engaged in the commercial lighting business since the summer of 1906, and therefore it was not affected by chapter 596, Laws of 1911.

The circuit judge held in substance that there was a contract between the parties by which it was agreed that the city might at any time engage in the commercial lighting business; that the obligation of this contract could not be impaired, although the Legislature might prohibit the city from building a lighting plant; that the contract was not affected by chapter 596, Laws of 1911; and that under the provisions of the ordinance of 1904 referred to the plaintiff was estopped from claiming that the city did not have the right to engage in the commercial lighting business. The trial judge also said he was inclined to think the position was well taken that the city was a public utility engaged in the business of commercial lighting long prior to the passage of the act of 1911.

The public utilities law was undoubtedly framed on the theory that certain kinds of business were of such a character that the duplication of plants for the...