Case Name: Public Service Commission of Indiana et al. v. City of Lebanon
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1941-05-19
Citations: 219 Ind. 62
Docket Number: No. 27,484
Parties: Public Service Commission of Indiana et al. v. City of Lebanon
Judges: 
Reporter: Indiana Reports
Volume: 219
Pages: 62–73

Head Matter:
Public Service Commission of Indiana et al. v. City of Lebanon
[No. 27,484.
Filed May 19, 1941.
Rehearing denied October 16, 1941.]
Evans & Hebei, and Owen S. Boling, all of Indianapolis, and Parr, Parr & Parr, and Rogers & Smith, all of Lebanon, for appellants.
Thomas 0. Beck, Adney & Adney, and Scifres & Hollingsworth, all of Lebanon, for appellee.

Opinion:
Fansler, J.
This is an appeal from a final judgment in the case involved in the appeals in City of Lebanon v. Public Service Company of Indiana et al. (1938), 214 Ind. 295, 14 N. E. (2d) 719, and Public Service Company of Indiana et al. v. City of Lebanon (1939), 215 Ind. 400, 19 N. E. (2d) 944. The action by the City of Lebanon seeks to condemn the public utility property of the Public Service Company of Indiana, and it will be called the appellant. Issues were formed upon the report of the appraisers. There was a trial by jury, and a verdict assessing appellant's damages at $210,000.
The only questions involved are: (1) Was it error to exclude tendered evidence of the value of the franchise under which appellant operated as a public utility distinct from the value of the business and property from a physical standpoint and from its going concern value? (2) Was the appellant entitled to damages which it claimed resulted from the severance of the local utility unit from its other utility property?
The appellant has been operating its Lebanon property under an indeterminate permit issued by the Public Service Commission in 1917. Prior to that time it had operated under a franchise from the City of Lebanon. The franchise was surrendered and an indeterminate permit accepted in lieu thereof. Under the act of 1918 (Acts 1913, ch. 76, § 1, p. 167), the indeterminate permit continued "until such time as the municipality shall exercise its option to purchase, as provided in this act, or until it shall be otherwise terminated according to law." The act (§ 102) also provides that by accepting the permit the utility company shall be deemed to consent to the future purchase of its property by the municipality in which the major part of it is situate, at the value and under the terms and conditions determined by the Public Service Commission, and shall be deemed to have waived the right to require that the necessity of the taking shall be established by a jury, and to have waived all other remedies and rights relative to condemnation, except such rights as are provided for in the act.
In 1933 the Public Utilities Law (Acts 1933, ch. 190, p. 928) was amended to the extent that if the city desires to purchase, the value of the property is to be determined under the Eminent Domain Act of 1905 (Acts 1905, ch. 48, p. 59) instead of by the Public Service Commission, and the determination of public convenience and necessity for the taking is delegated to the municipal council.
It is urgently contended by appellant that these changes destroy a vested right under its indeterminate permit contract with the state. It is conceded that the city still has the right to take its property under the power of eminent domain, but that in taking it, it must pay the value of the indeterminate permit contract itself. In other words, the contention is that the indeterminate permit continues in force until the city exercises its option to purchase and has the value of the property determined by the Public Service Commission, and that if the value is determined in any other manner the indeterminate permit is not terminated but must be purchased.
It is also contended that under section 104 of the act of 1913 (Acts 1913, supra) it is required that the necessity for taking the property shall be adjudicated by a court in an action in which the utility company is a party. This section, by its terms, affects only properties operating under a permit or franchise at the time the act takes effect, and not those operating under an indeterminate permit provided for in the act. It is also contended that because of the provision in section 102 of the act, that the holder of the permit, by accepting it, "shall be deemed to have waived the right of requiring the necessity of such taking to be established by the verdict of a jury," an agreement that the question of necessity shall be determined by a court without the intervention of a jury is implied, and that this right is a substantial consideration for the contract.
The questions thus presented were decided contrary to appellant's contention in Southern Indiana Gas & Electric Co. v. City of Boonville (1939), 215 Ind. 552, 20 N. E. (2d) 648. As supporting the views there expressed, see also, Galveston Wharf Co. et al. v. City of Galveston et al. (1923), 260 U. S. 473, 43 S. Ct. 168, 67 L. Ed. 355, and Contributors to Pennsylvania Hospital v. City of Philadelphia et al. (1917), 245 U. S. 20, 38 S. Ct. 35, 62 L. Ed. 124. The indeterminate permit provides that it shall terminate when the city exercises its option to purchase the property. It is pointed out in the Boonville case that the words "purchase" and "condemn" have been construed as relating to the same character of transaction, and it must be concluded that the appellant's contract terminated when the city's right to purchase was exercised, regardless of the procedure for fixing the purchase price.
In North Laramie Land Co. v. Hoffman et al. (1925), 268 U. S. 276, 284, 45 S. Ct. 491, 495, 69 L. Ed. 953, 958, it is said upon authority cited that: " . . . the necessity and expediency of the taking of property for public use 'are legislative questions, no matter who may be charged with their decision, and a hearing thereon is not essential to due process. . . " The act of 1913, supra, was modeled after a' Wisconsin act adopted in 1907, and much of the language of the Wisconsin act is copied into ours. Article XI, § 2, of the Constitution of Wisconsin requires that the necessity of the taking of property by eminent domain by a municipal corporation shall be passed upon by a jury. The Wisconsin act contains provisions identical with those in sections 104 and 102 of our act of 1913 above referred to. Obviously they were inserted in the Wisconsin act because of the provision of the Constitution of that state. There is no such provision in the Constitution of Indiana. On the contrary, our Constitution prohibits the delegation of legislative authority to the courts, and juries function as part of the judicial system. A more careful consideration of the differences in the constitutional law of the two states would have indicated the desirability of omitting the provision of the Wisconsin act in question from our statute. By waiving the right of requiring the necessity of the taking of the property by the city to be established by the verdict of a jury, the utility company waived nothing, since it had no such right under the law of this State or by the terms of the act. Neither did it have a right to have that question determined by a court; and the disclaimer of a right which it did not have cannot be constructed into an implied agreement that it should have a right entirely inconsistent with condemnation practice in this state and contrary to' our constitutional policies relating to the separation of governmental authority.
The indeterminate permit involved authorized the operation of a utility plant serving Lebanon and immediately adjacent territory. The property was self-contained and operated its own generating unit. Afterward use of the generating unit in Lebanon was abandoned, and energy for the plant was purchased from another company operating a generating plant in an adjoining county. In order to deliver power, this independent company constructed a power line to the City of Lebanon and beyond to serve other customers, and constructed a substation in the City of Lebanon. This company was selling the energy at wholesale, and was not operating under appellant's indeterminate permit. After this action seeking to condemn the property of the appellant operated under its indeterminate permit was begun, the appellant purchased the power transmission line and substation from the company from which it had been procuring power and which had been used for the wholesale distribution of power. The appellant asserts that it is entitled to damages which it claims resulted from the severance of its local utility unit from the wholesale distribution system which it acquired by purchase after the condemnation proceeding was begun.
By accepting the indeterminate permit, the appellant agreed that the city might purchase the utility property operated under the permit. This the city is seeking to do. It might have continued generating its oWn energy and the city would have been bound to purchase the generating plant. It chose, however, to purchase energy at wholesale, delivered to it in Lebanon by a third party, over wires and through a substation owned and operated by a third party. If this wholesale distribution system and substation were still owned by the third party it would not be seriously contended that the third party is entitled to damages by reason of the severance of the local utility from the wholesale distribution plant. The purchase of the wholesale distribution plant by the appellant cannot change the situation. The indeterminate permit contract contemplates the purchase by the city of the utility property operated under the permit, and the wholesale distribution system and substation cannot reasonably be said to be a part of the local plant..
The court below correctly excluded evidence of the depreciated value of the substation and wholesale distribution system.
The appellant also complains of the overruling of a challenge of a juror for cause upon the ground that he is a resident of Boone County, in which the City of Lebanon is located, and as such a potential future customer of the city, and hence interested in the cause. The juror lived beyond the territory served by the utility. This was not error. Public Service Company of Indiana et al. v. City of Lebanon, supra.
Judgment affirmed.
Note.—Reported in 34 N. E. (2d) 20.