Opinion ID: 2050767
Heading Depth: 1
Heading Rank: 1

Heading: Existence and Extent of Indeterminate Permit.

Text: It is a fundamental principle of public utility law that a public utility is required to serve only within the scope of its undertaking, or profession of service. Milwaukee v. Public Service Comm. (1954), 268 Wis. 116, 120, 66 N. W. (2d) 716; 1 Wyman, Public Service Corporations, p. 219, sec. 250. A public utility may make a profession of service in several ways. One is by the acceptance of a franchise which gives it the right to serve in a certain specified area. 43 Am. Jur., Public Utilities and Services, pp. 586, 587, sec. 22, and pp. 601, 602, sec. 47; 1 Wyman, Public Service Corporations, p. 179, sec. 212. In Wisconsin, public-utility franchises have been converted into indeterminate permits. Sec. 196.01 (5), Stats. This court recognized in Northern States Power Co. v. Public Service Comm. (1944), 246 Wis. 215, 224, 16 N. W. (2d) 790, that an obligation to extend service may arise by acceptance of and operation under an indeterminate permit. The crucial question is whether Wis. Tel. Co. did accept and operate under a franchise in the nature of an indeterminate permit applying to the town of Royalton. If it did, we are satisfied that under the foregoing authorities it could be compelled to extend telephone service anywhere in the town that the PSC might order under a proper finding of public convenience and necessity. Respondents Wis. Tel. Co. and Weyauwega espouse entirely different theories on the question of whether Wis. Tel. Co. operates under an indeterminate permit in the town of Royalton. Wis. Tel. Co. takes the position that it is impossible for a telephone utility to acquire an indeterminate permit within the limits of a town. On the other hand, Weyauwega concedes that Wis. Tel. Co. is operating in the town under an indeterminate permit, but contends that the area to which such permit extends is confined to that in which it has made a profession of service as evidenced by its exchange-area map filed with the PSC. The PSC grounds its contention, that Wis. Tel. Co. has accepted and is operating in Royalton under a town-wide indeterminate permit, upon sec. 182.017, Stats., [1] and the holding of this court in Kenosha v. Kenosha Home Telephone Co. (1912), 149 Wis. 338, 135 N. W. 848. Subs. (1) and (7) of sec. 182.017 were formerly part of sec. 180.17, which was sec. 1778 prior to the renumbering under the decimal system. Sec. 1778, first enacted in 1851, contained substantially the same language as present sub. (1) of sec. 182.017. The provision of present sub. (7) was not added by the legislature until 1905. The particular holding in the Kenosha Case, relied upon by the PSC, was thus stated by the court (p. 340): The first question presented by the appeal is, Was the ordinance of March, 1903, purporting to grant to the Citizens Telephone & Telegraph Company the right to operate a general telephone system in the city of Kenosha, valid as a franchise? This court has repeatedly answered the question in the negative. The only franchise needed by a telephone company to enable it to conduct its business anywhere within the state is the franchise conferred upon it by virtue of sec. 1778, Stats., when it is incorporated pursuant thereto. [Citing cases.] (Emphasis supplied.) The Wisconsin Public Utility Law was originally enacted as ch. 499, Laws of 1907. Sec. 1797 m -1(5) of this act provided for the transformation of certain public-utility franchises into indeterminate permits. Present sec. 196.01 (5), Stats., is the successor to this statute. [2] As originally enacted, sec. 1797 m -1(5) did not apply to telephone utilities. This was because express statutory language limited it to grants, directly or indirectly, from the state ... to own, operate, manage, or control any plant or equipment ... within this state for the production, transmission, delivery, or furnishing of heat, light, water, or power, ... Thus, telephone utilities were not expressly included. In 1929, by means of a Revisor's bill this statute was amended to read any public utility, in which form it was substantially the same as present sec. 196.01 (5). In 1930 the attorney general ruled that under the holding of the Kenosha Case any utility company organized under sec. 180.17 (now sec. 182.017), Stats., acquires an indeterminate permit upon entering a town for the purpose of rendering utility service, if no other utility already is operating in the town under an indeterminate permit. See 19 Op. Atty. Gen. 378. This is essentially the present contention of the PSC, except it also maintains that, if a second telephone utility obtains a certificate of convenience and necessity to operate in the town, such second telephone utility also operates in the town under an indeterminate permit. However, this opinion of the attorney general and the present contention of the PSC were rejected by this court in South Shore Utility Co. v. Railroad Comm. (1932), 207 Wis. 95, 240 N. W. 784. There the railroad commission had determined that the first electric utility to enter a town and render service thereby obtained an indeterminate permit which continued after the part of the town in which it served was incorporated as a village. The railroad commission ordered that a second electric utility, which had obtained a franchise from the village, cease and desist from rendering service in the village. The statute under which the first utility sought relief was sec. 196.50 (1). A history of sec. 196.50, stating its wording at different periods, is set forth in an appendix at the end of this opinion. At the time the South Shore Case arose, this statute read in part as follows: No license, permit, or franchise shall be granted to own, operate, manage, or control any plant or equipment for the conveyance of telephone messages, or for the production, transmission, delivery, or furnishing of heat, light, water, or power in any municipality, where there is in operation under an indeterminate permit 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 second public utility. (Italics supplied.) Because of this statutory language, the outcome of the South Shore Case turned on whether the first utility had possessed an indeterminate permit to operate in the town. Unless it had, the statute afforded no protection. This court held that it did not possess such an indeterminate permit. In disposing of the respondents' argument, that an indeterminate permit arose by reason of sec. 180.17 (now sec. 182.017), Stats., the court declared (p. 105): There would be much plausibility in respondents' contention if the legislature had not enacted a public utility law which appears to be as full, complete, and comprehensive as the legislature intended it to be. Sec. 180.17 is found in ch. 180, Stats., which relates to domestic corporations. Obviously the legislature has failed to provide how, if at all, indeterminate permits are acquired in towns. This also is of great significance when it is considered that the public utility law has, since its original enactment, been repeatedly amended. We do not feel that the contentions of respondents as to the effect of sec. 180.17 are so clear as to warrant us in upholding them. We construe this language of the court to mean that, in order for a grant of a power, right, or privilege by the state to a public utility to constitute an indeterminate permit within the meaning of the Public Utility Law, the same must be traceable to some provision of that law and resort cannot be made to some statute without that law, such as sec. 180.17 (now sec. 182.017), Stats. As pointed out elsewhere in the South Shore opinion, there was no provision in the Public Utility Law for the granting of any power, right, or privilege to an electric utility covering its operations in a town. However, this is not the situation with respect to telephone utilities. Sub. (2) of sec. 196.50, Stats., does provide for a direct grant by the state of a right and privilege to these public utilities. [3] This subsection protects the first telephone utility to operate in a town against the entrance and operation of any other telephone utility anywhere within the town. This is done by requiring such second utility to give notice to the PSC (formerly the railroad commission) stating the installation it proposes to make, and granting the commission the power to prohibit such proposed installation by finding, within twenty days after the giving of the notice, that public convenience and necessity do not require such installation. If two or more telephone utilities are already operating in a town, each is protected against extension or installation of additional service in the town by the requirement that notice be given to the commission of the proposed extension or installation and by the commission's power to veto the same by finding it not required by public convenience and necessity. The Kenosha Case holds that sec. 182.017 (1), Stats., confers a franchise to operate anywhere within the state upon a telephone public utility incorporated thereunder. We are satisfied that the granting of such a franchise by the state results in no correlative duty on the part of the utility to extend service anywhere in the state. This is because we consider it unfair to imply a profession to serve in so extensive an area from the mere acts of accepting such a corporate franchise and commencing to operate somewhere in the state. We have found no cases from other jurisdictions which have applied such principle on a state-wide basis. However, when the legislature amended sec. 1797 m -74 (now sec. 196.50), Stats., so as to give a telephone utility the afore-described protection on a town-area basis, the effect was to localize the former state-wide franchise possessed by it. Because the franchise benefits were given on a town basis by such 1913 amendment (now sub. (2) of sec. 196.50), the law implies a correlative duty to provide service anywhere in the town that the PSC may properly find public convenience and necessity require it. This conclusion is reinforced by two prior decisions, one of this court and one of the PSC. The facts involved in Lodi Telephone Co. v. Public Service Comm. (1952), 262 Wis. 416, 55 N. W. (2d) 379, 57 N. W. (2d) 700, are very similar to those in the instant case. In that case the court upheld a PSC order requiring the Commonwealth Telephone Company to extend service in a town in which the Lodi Telephone Company also rendered service. However, the order was not attacked on the ground that such an extension exceeded Commonwealth's profession of service. Nevertheless, the following statement of this court is significant (p. 424): We agree with the learned trial judge, who said: `Commonwealth was in the rural town. Lodi was in the rural town. Each had an obligation to render adequate service. If it had an indeterminate permit, its obligation was coextensive with its right.' Also, in Wichman v. Wood County Telephone Co. (1952), 37 P.S.C.W. 112, 121, the commission stated that: The question has been raised as to the obligation of a telephone company to extend service in towns. The commission is of the opinion that the right to serve carries with it an equal duty to serve. If a telephone utility has the right to serve in a particular town, it has a duty to serve in that town, subject to reasonable conditions of extension to be provided in its lawfully filed extension rules and subject further to the requirements of sec. 196.50, Stats., where another telephone utility is serving in the same town. The correlative duty to extend service on a town-wide basis is necessarily limited to a telephone utility which either commenced to operate in the town after the 1913 amendment of sec. 1797 m -74 (now sec. 196.50), Stats., or, having operated in the town prior to that time, thereafter extended its lines therein. This is because implicit in the principle of a correlative duty to provide service based upon acceptance of a franchise is the idea of a voluntary act on the part of the utility in accepting the franchise. A utility entering a town and providing service after the 1913 enactment can logically be deemed to accept the town-wide franchise, and must take the burdens as well as the advantages thereof. However, this is not the case where the telephone utility was already operating in the town at the time the 1913 amendment was enacted. The latter situation lacks any voluntary act by the utility to accept a town-wide franchise. Thus, to compel it to extend its lines in the town against its will would violate the due-process clause of the Fourteenth amendment. Valcour v. Morrisville (1936), 108 Vt. 242, 184 Atl. 881. The only way such a utility could have declined to accept the town-wide franchise, with its resulting burdens, would have been to cease to operate in the town, and this it could not have done because it was already under a profession to render adequate service to the customers it was then serving in the town. Therefore, no acceptance of the franchise can be inferred from its mere continuance to render service in the town after the date of the 1913 enactment, and no town-wide correlative duty can be found from such continuance. We deem the fact, that a town-wide franchise was not technically labeled an indeterminate permit by sec. 1797 m -1(5) (now sec. 196.01 (5)), Stats., until amendment of the statute in 1929, to be immaterial. The franchise was indeterminate in character by its inherent nature, because it was subject to termination by the legislature at any time. Cf. Superior Water Light & Power Co. v. Superior (1921), 174 Wis. 257, 284, 181 N. W. 113, 183 N. W. 254, reversed on other grounds, 263 U. S. 125, 44 Sup. Ct. 82, 68 L. Ed. 204. It should also be pointed out here that the legislature did not employ the term indeterminate permit in sub. (2) of sec. 196.50, and its predecessor statute, although it did employ it in sub. (1) of such statute. Our conclusion requires that we expressly withdraw, in so far as it applies to telephone utilities, the following dictum in Milwaukee v. Public Service Comm. (1942), 241 Wis. 249, 256, 5 N. W. (2d) 800: It is held in South Shore Utility Co. v. Railroad Comm. that there is no such thing as an indeterminate permit in a town, ... This is undoubtedly a true statement of the law as it stood with respect to electric utilities when the South Shore Case was decided, and with respect to water utilities when Milwaukee v. Public Service Comm. was decided. However, in neither of these cases was the court concerned with sub. (2) of sec. 196.50, Stats., which, when construed together with sec. 182.017, does grant telephone utilities an indeterminate permit to operate in towns. The two respondent utilities further rest their argument, that it is impossible for a telephone utility to possess an indeterminate permit in a town, upon the wording of the last sentence of sec. 196.50 (2), Stats., which provides: Any public utility operating any telephone exchange in any city or village shall, on demand, extend its lines to the limits of such city or village for the purposes mentioned and subject to the conditions and requirements prescribed in secs. 196.04 and 196.19 subs. (4) and (5). It is contended that under the canon of statutory construction, expressio unius est exclusio alterius, this statutory language precludes an interpretation of the Public Utility Law which would empower the PSC to order a telephone utility to extend its service in a town. We deem this argument to be grounded upon the fallacious interpretation that the word demand, as used in the quoted sentence, has reference to the PSC. A more-reasonable interpretation is that demand refers to a prospective customer or to the village board or city council. [4] Therefore, invoking this canon in construing the quoted sentence would only result in precluding a prospective customer, or the town board, from having the absolute right to demand an extension of service by a telephone utility in a town. This would not preclude the PSC from exercising its statutory power under secs. 196.03 (1) and 196.37 (2), Stats., [5] to require an extension of service in a town by a telephone utility when public convenience and necessity so require and when a duty rests upon the utility to provide such extended service. The obligation to provide an extension of service only when the PSC properly determines that the standards of public convenience and necessity require it is very different than the absolute duty of having to extend service on the demand of some individual or municipal council. Furthermore, respondents concede that the PSC does possess the power to compel a telephone utility to extend service in a town to the extent of the territory embraced in its filed exchange-service map. The record is silent in this case as to when Wis. Tel. Co. first commenced to render telephone service in the town of Royalton. Resort to taking judicial notice of the PSC files has proved of no assistance. These files show that in 1930 Wis. Tel. Co. acquired the properties of a predecessor telephone utility then operating in the town, but do not disclose when such predecessor had first commenced to operate in the town. In acquiring the properties of the predecessor utility, Wis. Tel. Co. succeeded to all the franchise rights of the latter, and assumed all the obligations of such franchise. Calumet Service Co. v. Chilton (1912), 148 Wis. 334, 353, 135 N. W. 131. Therefore, whether Wis. Tel. Co. has a correlative duty to extend telephone service in the town of Royalton, arising from acceptance of a franchise applicable to the town, is dependent upon whether one of its predecessors, to whose rights it has succeeded, was rendering service in the town prior to the 1913 amendment of sec. 1797 m -74, Stats. If such service was being rendered, then Wis. Tel. Co. has no present obligation to extend its service unless either Wis. Tel. Co. or a predecessor extended its lines in the town after the 1913 amendment or proposed an extension in its filed exchange-area map.