Court Opinion

ID: 9706166
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:33:15.173081+00
Date Added: 2024-06-11T18:22:19.843141
License: Public Domain

Concurring Opinion
Emmert, J.
I concur in the result of the majority opinion, but not in all the reasoning by which it was accomplished. In an appeal from an order of the Commission fixing utility rates, we ought not have one standard for the trial court to consider the evidence when the utility takes the appeal, and another standard when a customer of the utility takes the appeal. Equal *102justice under law should give the same protection to the rate payer that it does the rate collector, and such a double standard for judicial review of rates cannot adequately protect the users of the utilities’ services.
In Public Service Commission of Indiana, et al. v. Indiana Bell Telephone Co. (Dec. 1, 1955), 235 Ind. 1, 130 N. E. 2d 467, the Commission relied on Public Service Commission of Indiana v. City of LaPorte (1935), 207 Ind. 462, 193 N. E. 668, in its holding that the findings of the Commission would not be upset if they were sustained by substantial evidence, but this court repudiated that rule, and said:
“Hence, where a rate established by the Commission is attacked as confiscatory, the court may, upon its own independent judgment, review that issue as to both law and facts, to the end that constitutional rights may be protected. Public Service Commission v. Ind. Bell. Tel. Co. (1953), 232 Ind. 332, 347, 112 N. E. 2d 751, supra; Public Serv. Comm. v. Indianapolis Rys. (1948), 225 Ind. 656, 76 N. E. 2d 841, supra; Staten Island Edison Corporation v. Maltbie (1947), 296 N. Y. 374, 73 N. E. 2d 705, 707; Opinion of the Justices (1952), 328 Mass. 679, 106 N. E. 2d 259, and cases there cited; St. Joseph Stock Yards Co. v. United States (1936), 298 U. S. 38, 80 L. Ed. 1033, 56 S. Ct. 720, supra; Ohio Valley Water Co. v. Ben Avon Borough (1920), 253 U. S. 287, 64 L. Ed. 908, 40 S. Ct. 527, supra.”
In St. Joseph Stock Yards Co. v. United States (1936), 298 U. S. 38, 51, 52, 56 S. Ct. 720, 80 L. Ed. 1033, 1041, 1042, the majority opinion by Chief Justice Hughes reasoned:
“But the Constitution fixes limits to the rate-making power by prohibiting the deprivation of property without due process of law or the taking of private property for public use' without just compensation. When *103the legislature acts directly, its action is subject to judicial scrutiny and determination in order to prevent the transgression of these limits of power. The legislature cannot preclude that scrutiny of determination by any declaration or legislative finding. Legislative declaration or finding is necessarily subject to independent judicial review upon the facts and the law by courts of competent jurisdiction to the end that the Constitution as the supreme law of the land may be maintained. Nor can the legislature escape the constitutional limitation by authorizing its agent to make findings that the agent has kept within that limitation. Legislative agencies, with varying qualifications, work in a field peculiarly exposed to political demands. Some may be expert and impartial, others subservient. It is not difficult for them to observe the requirements of law in giving a hearing and receiving evidence. But to say that their findings of fact may be made conclusive where constitutional rights of liberty and property are involved, although the evidence clearly establishes that the findings are wrong and constitutional rights- have been invaded, is to place those rights at the mercy of administrative officials and seriously to impair the security inherent in our judicial safeguards. That prospect, without multiplication of administrative agencies, is not one to be lightly regarded. It is said that we can retain judicial authority to examine the weight of evidence when the question concerns the right of personal liberty. But if this be so, it is not because we are privileged to perform our judicial duty in that case and for reasons of convenience to disregard it in others. The principle applies when rights either of person or of property are protected by constitutional restrictions. Under our system there is' no warrant for the view that the judicial power of a competent court can be circumscribed by *104any legislative arrangement designed to give effect to administrative action going beyond the limits of constitutional authority. This is the purport of the decisions above cited with respect to the exercise of an independent judicial judgment upon the facts where confiscation is alleged.”
Section 54-203, Burns’ 1951 Replacement, should be construed in pari materia with Chapter 169 of the 1929 Acts, § 54-429, et seq., Burns’ 1951 Replacement, which is the general act concerning review of orders of the Commission. This latter statute gives a right of action “to vacate or set aside or enjoin the enforcement of any such decision, ruling, order, determination, requirement or direction, on the ground that the same is insufficient, unreasonable, unlawful, or procured by fraud or other unlawful methods.” The complaint by the City did allege the order was unreasonable and unlawful. The Company did not attack the sufficiency of the complaint, and if the evidence disclosed the approved rates were too high the order would deprive the City of its property without due process of law, as well as offend Sections 12 and 21 of our Bill of Rights.1 Moreover, the Company in its original brief did contend that “The end result of the trial court’s decision would be confiscation of the Company’s property contrary to Article I, Section 21, of the Indiana Constitution and the Fourteenth Amendment to the Constitution of the United States.” If the Company had appealed from the Commission’s *105order on the ground the rates were confiscatory, the trial court would have been required to make its own independent, judicial inquiry and findings as to the adequacy of the rates to yield a reasonable return, but merely because the City appealed and contended the Commission’s approved rates were too high should not change the standard by which the trial court is required to make its determination.
The anomalous position this court assumes in declaring one standard for a judicial review when a utility takes the appeal on rates, and another when a user and rate payer takes the appeal is at once apparent if both take an appeal from the same order, as each has a right to do. The utility can claim the rates are too low, and the user claim the rates are too high. If we should adhere to the standard adopted in Public Service Commission of Indiana et al. v. Indiana Bell Telephone Co. (Dec. 1, 1955), 235 Ind. 1, 130 N. E. 2d 467, supra, the trial court would make its own independent judicial inquiry and findings as to valuation, operating expenses, rates and return on the issues presented by the utility’s appeal, while on the issues tendered by the user’s appeal, under the rule adopted by the majority in the appeal at bar, the trial court would only find whether there was substantial evidence before the Commission to sustain its findings. The form and substance of the findings in each would be different. On the issues presented by the utility’s appeal the findings as to valuation, operating expenses, rates and return would be what the court itself found from the evidence introduced before it, including of course the record before the Commission, while on the issues presented by the user’s appeal, the findings would be as to whether there was substantial evidence before the Commission *106as to each finding the Commission made as to valuation, operating expenses, rates and return.
It is idle to suggest that the correctness of the standard used by the trial court in reviewing the action by the Commission is not before us in this appeal. The Company and the Commission urge that the finding and order of the Commission should be affirmed if there was substantial evidence before the Commission to sustain each essential finding. If that is not the true standard this court judicially knows such to be erroneous as a matter of law, and it is its duty to so declare it. Nor would a single standard requiring the trial court to make its own independent judicial inquiry and finding on fair valuation of the property used and useful in producing the service, reasonable operating expenses, a fair return on the valuation, and the amount to be realized by the rates, violate constitutional requirements for separation of legislative and judicial powers. The adoption of such a standard in this appeal does not fix utility rates any more than the court fixes rates when it determines whether certain rates would deprive a utility of its property without due process of law.
The City has many uses for water which are indispensably necessary for it to function as a municipal corporation of this state. It is not free to contract with the Company for many of its water services, and the state under the police power fixes the price that shall be paid by the City. In fact the City could not build its own water system for years in the future if it chose to do so. If the rates are fixed unreasonably high, it must pay them or have its water services shut off thus impairing the exercise of its corporate powers, and it is thereby deprived of its property without due process of law under the Fourteenth Amendment just the same as the Company would be deprived of its property *107without due process if the rates were too low. The case of an individual user is just as precarious as the City, for water is a necessity which he must have, and the average user is not in a position to build and maintain his own water system. Even though we have not found any case where a customer and user contended that excessive rates deprived him of his property without due process of law, this is what happens to him if he is compelled to pay excessive rates.
On March 18, 1954, the Commission made its finding and order authorizing an increase for metered water service effective from and after April 1, 1954. It found that the fair value of the Company’s used and useful property, including material and supplies, was not less than $36,500,000. This finding was prima facie correct on appeal to the trial court (§54-428, Burns’ 1951 Replacement), and unless there was evidence of probative value that this valuation was excessive, any finding by the trial court that the fair value was less than that found by the Commission would be contrary to law and not sustained by sufficient evidence. The only evidence to contradict the Commission’s finding came from the witness Alex Van Praag, Jr., who testified for the City.
This witness qualified as an expert on valuations, and after detailing how he arrived at various valuations, testified that it was his opinion that the fair value of the physical properties of the Company was $32,400,--000. He said this was a judgment figure, and not an appraisal for sale purposes. However, he had prepared the City’s exhibit No. 4, which was introduced in evidence, which disclosed without any doubt that he was basing that opinion on original cost less depreciation, plus materials and supplies and construction work in progress. The same chart disclosed that when he used reconstruction cost new, less observed depreciation, *108plus material and supplies and construction work in progress, he arrived at a valuation of $47,177,320.00, which is more than ten million dollars higher than the valuation found by the Commission, and which the City now alleges to be excessive.
We judicially know there has been an inflation in values since 1939. A utility corporation and its stockholders take the gain from an increase in values of its property, and they stand the loss when values depreciate during a time of falling prices or a depression, just the same as any other corporation and its stockholders may benefit or lose when the value of the corporate property goes up or down. If the state condemns a shack in shanty town the owner is compensated according to its value when taken, and not according to what it cost him. The Federal Constitution and the Indiana Constitution both protect him, and they protect corporate enterprise with equal fairness by prohibiting confiscation of its property either directly or indirectly. Utilities are not bought and sold in any market place so that a market value can be thus established, and in an area like Indianapolis, with its growth or population and industry, reproduction cost new less depreciation cannot be disregarded in fixing a valuation for rate making purposes. Mr. Prang’s “judgment” opinion on value was without probative value and should have been ignored by the trial court.
There was no evidence before the trial court to sustain its finding that the Commission’s valuation of the company at not less than $36,500,000 was unreasonable, unjust, unlawful and excessive, even assuming such finding was not a statement of conclusions. From finding No. 30 it is apparent that the trial court used as one basis for upsetting the valuation by the Commission the assessed valuation of the company’s land for taxa*109tion. The opinion by Judge Arterburn adequately disposes of that erroneous basis for valuation.
It should be observed that neither the finding by the Commission nor by the trial court observed the well known law that a recital of evidence or testimony is not a finding. Although it is surplusage, it cannot take the place of a finding of ultimate fact. However, the trial court made no findings that the Commission’s findings did not follow statutory requirements as previously construed by us.2
There is a mathematical error in the trial court’s finding No. 24 based on the testimony of Mr. Carl Cecil before the Commission. By the time the trial was had, some revenue experience with the new rates was available. In the light of this new evidence the highest estimate for the new rates estimated they would have produced in a full year of operation the net sum of $2,102,000. The Commission by its amended order reduced the rates by the sum of $111,000, leaving the highest estimate then in the sum of $2,091,000. The *110City’s expert on rate of return recommended a 5.5% rate of return on valuation, which was the lowest rate proposed by any witness. Since we have already determined that the Commission’s valuation of $36,500,000 was proper, a 5.5% return on this would yield $2,007,-500, which is but $83,500 less than the estimated return the amended rates would yield. It was conceded that the Company was continually making additions to its property used and useful in producing its service, and when this fact is considered it becomes apparent that the amended rates as determined by the Commission were reasonable and just.
The opinion by the trial court precedes the special findings of facts and conclusions of law, and fails to comply with the ordinary legal understanding that an opinion should state the facts and the law by which the court’s decision was reached. Such an opinion becomes of great assistance to this court if the judgment be appealed here, or to the Commission in any subsequent proceedings before it. There should have been a special finding as to the fair valuation of the Company’s property used and useful at the time of trial, what would be a reasonable rate of return on that property, the reasonable and necessary operating expenses in producing the service, and the revenues to be derived from the new rates. The burden of proof on each of these findings was upon the City, and a failure to find on an essential fact is in legal effect a finding against the party having the burden on that issue. Newman v. Newman (1943), 221 Ind. 432, 48 N. E. 2d 455; City of Frankfort v. Easterly (1943), 221 Ind. 268, 46 N. E. 2d 817, 47 N. E. 2d 319; Wabash Valley Coach Co. v. Turner (1943), 221 Ind. 52, 46 N. E. 2d 212. Therefore, the conclusions of law are in error.
*111The case was fairly tried before the Commission, and the judgment of the trial court should be reversed with instructions to restate its conclusions of law in conformity with our opinion, and to enter judgment accordingly.

. “All courts shall be open; and every man, for injury done to him in his person, property, or reputation, shall have remedy by due course of law. . . .” Section 12, Article I, Constitution of Indiana.
“. . . No man’s property shall be taken by law, without just compensation; . . .” Section 21, Article I, Constitution of Indiana. See Valparaiso Lighting Co. v. Public Service Comm. (1920), 190 Ind. 253, 129 N. E. 13.

. “Section 54-112 Burns’, 1933 (Supp.), in defining the duties of the Commission states: ‘The commission created by this act shall in all controversial proceedings heard by it be an impartial fact-finding body and shall make its orders in such cases upon the facts impartially found by it.’ (Our italics.) These facts should be found specially and not generally. The findings must be specific enough to enable the court to review intelligently the Commission’s decisions.” Kosciusko County, Etc. v. Public Service Comm. (1948), 225 Ind. 666, 674, 77 N. E. 2d 572. This holding was followed in Wabash Valley Coach Co. v. Arrow Coach Lines Inc. (1950), 228 Ind. 609, 94 N. E. (2d) 753; Public Service Comm. v. Ft. Wayne U. Ry. Co. (1953), 232 Ind. 82, 111 N. E. 2d 719, and Indianapolis & So. Motor Exp. Inc. v. Public Service Comm. (1953), 232 Ind. 377, 112 N. E. 2d 864. In the latter case at page 382 the court said: “A statement as to what various witnesses testified to is not a finding of ultimate facts. Flanagan, Wiltrout & Hamilton, Ind. Tr. & App. Pr. §1731, p. 350; 3 Lowe, Works’ Indiana Practice §53.24, p. 299; 2 Gavit Ind. Pl. & Pr. §432, p. 2365.”