Court Opinion

ID: 9530536
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:00:39.988393+00
Date Added: 2024-06-11T13:28:08.667215
License: Public Domain

Mr. Justice Doyle
dissenting:
My disposition is to affirm the judgment of the district court, which judgment affirms the findings of the Commission. The only justified modification made by the majority is that which pertains to removal of lines in the Arvada area. In other respects the Commission’s findings are most impressive. The Commission went to great lengths in its efforts to solve a most perplexing problem. It conducted hearings extending over a period of a year and its findings show a scrupulous adherence to the law and a conscientious effort to achieve a practical and equitable disposition of the issues. In view of this, the Court should not set aside well founded findings and well premised conclusions upon the simple basis of lack of sympathy for the cooperative arising from its having evolved as a federally sponsored instrumentality. Such an attitude is apparent in the majority opinion.
The part of the majority opinion with which I am in fundamental disagreement is the determination that the territory in question belongs to Public Service and that Union notwithstanding that it is now a recognized utility cannot further expand. This is contrary to the statute and contrary to the basic principles of utility regulation. In view of this ruling, the holding that Union did not acquire utility status until such time as the Commission recognized it must also be discussed.

The determination that Union is entitled to a Certificate of Convenience and Necessity.

Union contends that notwithstanding that it has operated as a cooperative since 1939 and notwithstanding *153that it did not apply for a Certificate of Convenience and Necessity until June 30, 1955, that during all of the years of its operation it was in fact a public utility' — 'that it built and extended its lines as a utility and that its facilities now occupy the areas which are here in question and that its recognition as a utility should relate back to 1940. The Commission found as a fact that Union had evolved to utility status but further found that Union’s utility status should not be retroactive. The Commission noted, however, that prior to the development of Union “large sections of the area and numerous rural residents therein were not being supplied with electricity, the principal reason therefor being the cost of wiring their premises and cost of extensions in the thinly populated areas.”
It is undisputed that Public Service did not during the period in question, from 1940 until 1955, seek to actually develop the rural portions of the Appendix A territory. To be sure, Public Service had lines in the county for the purpose of serving urban centers. Moreover, Public Service held itself out as willing to serve the entire area but it was Union that was to bring service to the farms of the area. Public Service takes the position that the whole of Colorado, with the exception of those parts not being served by other utilities, is contiguous to its territory. So the only difference between the Appendix A area and the other parts of the state is that in the former there are some lines. The Commission found this fact and pointed out the realities of the situation as follows:
“In the present case, each party claims it has been ‘serving the territory’ in which it operated. The effect of the statute, which is controlling, is discussed below. The statute aside, and from a public viewpoint, however, ‘territory’ is not served; only customers — people — are served. The Utilities, if they were serving the territory at the time Union developed and installed its lines, were doing so only in a technical sense. Doubtless, the eco*154nomic realities of the time made it difficult, if not impossible, for the utilities to serve everyone in the area. The fact is, however, that they did not serve everyone. If they had, Union could never come into existence; it would have found no one to serve. Union was nurtured on customers the utilities did not serve, and in the case of the Public Service area, this occurred with the existing utilities’ failure to supply all of the needs of their territory, whatever the reason, has now come home to roost. The cooperative is a fait accompli; it is in existence, serving customers. The cooperative is there to stay so far as this Commission is concerned.”
The evidence at the hearing established that the Union lines are much more prevalent than those of Public Service. The reason that the territory involved was so developed is conceded by the parties to be found in the economic circumstances of the times. Public Service could not bring its lines to the rural areas without prohibitive charges. Consequently there would have been no service in the Appendix A territory had it not been for the formation and development of Union. As indicated by the Commission, Public Service was not too concerned as long as the territory was essentially rural. Its concern developed only after the war and during the period of population influx and growth, at which time it became feasible for Public Service to expand into the Appendix A territory. It was only then that the conflict and competition developed.
As I view it, the refusal of the Commission to recognize Union’s public utility status prior to October 17, 1955, is not too significant if the remainder of the Commission’s decision to the effect that no one of the parties has exclusive rights in the territory is sustained. In view, however, of the majority determination that the Certificate is not really a Certificate, then the finding and conclusion of the Commission should receive careful scrutiny. It would appear that the determination of the Commission that the service rendered by Union was not *155rendered as a public utility, is based entirely on formal aspects. It is said that Union served its members only, and this point is stressed notwithstanding the testimony that membership was never refused to anyone and notwithstanding the fact that Union entered this sparsely occupied area and brought electricity to some 3,000 outlets while Public Service stood by and merely expressed a readiness to serve. If the test of public utility character is in whether it has dedicated its property to the service of the public and has offered to serve it, it would seem that Union would be more entitled to public utility status in the specific areas than Public Service. Legal formalities are, of course, important in determining character. They should not, however, outweigh the actual facts. If it were shown that Union followed a restrictive policy in taking on new members there would be some substance to the argument, but when it is shown that any individual who desires utility service could become a member, the restrictive suggestion arising from the requirement of membership disappears. The decided cases have recognized that substance rather than form should govern this determination.
In Davis v. People, 79 Colo. 642, 247 Pac. 801 this Court affirmed a judgment of the district court enjoining Davis from operating a truck line without a Certificate of Convenience and Necessity. He purported to serve members only of an association. He had a contract binding him to haul for members only but he accepted shipments from non-members to members and from members to non-members. In holding that he was in fact operating as a utility and was thus subject to the law, this Court said:
“In determining whether a business is that of a common carrier ‘the important thing is what it does, not what its charter says.’ Terminal Taxicab Co. v. Kutz, et al., 241 U.S. 252, 36 Sup. Ct. 583, 60 L.Ed. 984, Ann. Cas. 1916D, 765. A service may effect ‘so considerable a fraction of the public that it is public in the same sense in which *156any other may be called so * * *. The public does not mean everybody all the time.’
“Had defendant made all, save one, of the shippers of freight in that territory, or all purchasers of postage at any postoffice therein, members of the association, and claimed that such limitation converted an otherwise public into a private carrier, the contention would be so absurd as to be instantly rejected. But the reasons for that rejection would be the identical reasons which demand rejection of defendant’s contention in the instant case: (a) The proportion of the public served is so large as to be the public; (b) the limitation is a mere device to hoodwink the law.”
Decisions of the Commission which recognize “character of operation” rather than the form of the charter as the test of determining whether the subject was a proper utility are: Baker v. Lake City L. & P. Co., 3 PUR (3d) 97, City of Colorado Springs v. Colo. P.U.C., 86 PUR-NS 57. Cases from other states which support the so-called factual test are: Industrial Gas Co. v. Public Utilities Commission, 135 Ohio St. 408, 21 N.E. (2d) 166 and Rural Electric Co. v. State Board of Equalization, 57 Wyo. 451, 120 P. (2d) 741; Arkansas-Louisiana Cooperative v. Arkansas Public Service Commission, 210 Ark. 84, 194 S.W. (2d) 673; Natural Gas Service Co. v. Surv-Yu Cooperative, Inc., 69 Ariz. 328, 213 P. (2d) 677, 70 Ariz. 235, 219 P. (2d) 324; (cited with approval Davis v. People, supra); Bookhart v. Central Elec. P. Coop. 219 S.C. 414, 65 S.E. (2d) 781; Consolidated Flower Shipments, Inc. v. Civil Aeronautics Board, (9 Cir. 1954), 213 F. (2d) 814.
In the Wyoming case, cited above (Rural Electric Company v. State Board of Equalization), the Court used the following pertinent language:
“Of course, if the service is rendered pursuant to contract or limited membership, it is difficult to hold that one has expressly held himself out as ready to serve the public generally. But the text does not require an ex*157press holding out. It may be done impliedly, as by wide solicitation and other factors * * *” (The Davis case in 79 Colo. 642 is here cited.) 120 P. (2d) 748.
“These cases, we think, clearly establish the law to be that merely because an owner enters into contracts in connection with his service, and in some instances refuses service, is not a controlling factor. If that is correct that must be true also in connection with an owner with limited membership, as in the case at bar, since such limited membership is but another form of an attempted limitation by contract.”
In the California case, that of In Re Plumas-Sierra R. Electric Co-op, 88 PUR-NS 506, the Commission declared:
“The mere declaration of restrictive purposes set forth in its Articles of Incorporation does not preclude a finding that respondent is serving the public. Although it asserts that membership is a prerequisite to service, its readiness to take on new members or patrons, and the statement of its secretary-treasurer that it has never rejected an application for membership, clearly manifests an intention to serve anyone who can be supplied with power by its existing facilities or by reasonable extensions thereof.”
If the “fact” test rather than the charter test is followed in the case at bar, there can be no question but that Union is and has been for a long period of time operating as a public utility because it has not only set out to serve the users in the area in question but has aggressively sought new members and has never rejected a member. Moreover, it has actually served while the utility companies stood by waiting for the population to develop so as to make the operation a profitable one. In view of these facts and in view of the legal principles applicable to recognition of an operation as a public utility, it strikes me as unfair and unrealistic to penalize Union for its failure to obtain recognition as a utility prior to this time.
Public Service emphasizes that this constituted un*158lawful operation and that something in the nature of the unclean hands doctrine should now bar Union from arriving at a status of a utility. In my opinion, there might be a basis for this contention if Union’s recognition did result in prejudice to Public Service. In other words, if Union were now granted exclusive rights within the territory so as to force Public Service to backtrack, the latter would have a legitimate complaint. It could then contend that estoppel operated. The Commission, however, avoided this by refusing to give retroactive effect to the Certificate of Union. Thus it is impossible to conclude that Public Service is aggrieved.
It would follow from an application of the “fact” test that Union was a utility at the time it filed its complaint against Public Service in case No. 5108 and that the Commission should have taken jurisdiction of the controversy. It is apparent from the majority opinion that Union is not considered now as a utility and from the language of the majority it might be inferred that it is considered at best as a second class utility. It would seem that its only reason for affirming the granting of a Certificate to Union is that there is no particular objection to this on the part of the other utilities so long as Union is restrained. I find no basis in the briefs for the observation (in the majority opinion) that neither Public Service nor Central objects to the issuance of a Certificate “to render service limited in scope.” Public Service has taken strong exception to the recognition of Union as a utility for any purpose. It has proceeded, and I think correctly, on the premise that it is impossible to recognize Union as a utility (as the majority has) and at the same time (for practical purposes) not recognize it as a utility.

The propriety of the majority holding that even though Union is entitled to utility status it is restricted in its operations to serving the members and customers which it had on January 1,1957.

The order of the Commission was that none of the *159parties, that is, neither of the utilities nor Union, had acquired exclusive rights in the so-called Appendix A territory. Acting on this premise and in an effort to treat the parties equitably, the Commission in effect prohibited further expansion on the part of any of the parties without their first obtaining a Certificate from the Commission. On this the Commission stated:
“Each party asserts that its territory includes all open ground between its lines and the lines of the next utility neighboring. Each aggressively asserts that it now holds itself out to serve, and actually is serving, all of this intervening territory. Their activities in seeking new business even to the extent of overbuilding one another, bears them out. In the present circumstances, we find as fact that indeed all of the parties are aggressively serving the territory in issue in this proceeding, and that new construction by any party may well interfere with the operation of some other party’s facilities. This being true, if all three are regulated public utilities, and they are, by our present decision, then none of them can make any extension without entering territory which is being ‘served by a utility of like character.’ All extensions will thus require prior authority with the obvious exception of extensions made better to serve existing customers, and extensions within and to areas, including cities and towns, already certificated.” (Emphasis supplied.)
The Commission noted.also that it would not be in the public interest to redistribute lines and customers of the various parties and concluded:
“ * * * If the parties are held in approximate status quo for a time, the ends desired can be accomplished with minimal dislocation and maximum benefit to the public and the parties. Caution must be exercised, of course, not to inhibit growth in the meantime.”
Its order authorized extension of service to a- distance of 300 feet without certification. Its reasoning in arriving at this conclusion was:
*160“Acting in the expectation that the parties will cooperate in an effort to resolve their differences, we should leave a procedural door ajar for them to adjust these differences seriatim at minimum expense, inconvenience and delay. It appears that extension of service by secondary line to a point more than 300 feet distant from the primary line is not economical, nor do such long secondary extensions hold voltage well or provide good service. Any significant change in status will therefore require extension of primary line. Our statute (’53 C.R.S. 115-3-4), concerning rate changes establishes a pattern suitable to our purpose here, when it provides for a filing to be made, to become effective in a specified time unless sooner suspended. We will base our order on such a pattern.”
It implemented the above by ordering:
“All parties shall be permitted, without further authority, to make extension of their facilities, or extensions in the aggregate, which do not exceed 300 feet in length.”
A reading of the opinion and findings of the Commission indicates that the matter received careful attention and analysis. The order appeals to me as being equitable in view of the high degree of complexity of the problem which the Commission was required to solve. It would appear that the parties have found it practical as we are told that both Public Service and Union have proceeded to obtain Certificates (as of the time of the filing of the briefs) in at least 100 instances.
In its brief filed December 31, 1958, Union said:
“The Commission by the Decision stated that it was holding that all further specific extensions desired by any one of the three public utilities before it would have to be preceded by an application for authority to construct each such extension, and in advance of construction. This part of the Decision is exactly in line with the authority and requirements of the statute. Under this part of the order, the parties have filed about 100 *161applications for extensions, all pursuant to the Decision, and all involving requests for this sort of certificate. The Commission has acted thereon and the needed extensions have been built to serve new customers, or new locations, by whichever public utility has obtained the certificate from the Commission. So the development of the area has gone forward in an orderly manner under the provisions of the Decision.”
The decision of this Court would upset the balance which has been achieved by means of the carefully conceived and equitable formula of the Commission. The effect of the majority decision is that Public Service and Central, within their respective areas, are entitled to exclusive territorial rights and that Union, even though now held to be a public utility by the Commission and this Court, is hamstrung in future operations. Public Service and Central can now go forward without any kind of Certificate and can expand at will regardless of duplications or conflicts with Union. Union, on the other hand, is told that it must stand still — that it cannot acquire new customers; that it cannot extend its facility except upon a showing that “adequate service is not readily available from Public Service or Central”; that its future operations must be in a regulated straight jacket. Thus the only new customers that Union can serve are the ones that Public Service and Colorado Central find inexpedient to serve.
Apart from its practicable unworkability, the decision is legally untenable in the following respects (among others):
1. This decision cannot be reconciled with the conclusion that Union is a public utility. As a public utility, Union is entitled to all of the rights granted to it by the statute, C.R.S. ’53, 115-5-1, which provides that the utility may without the Certificate extend “into territory, either within or without a city and county or city or town, contiguous to its facility, or line, plant or system, and not therefore served by a public utility of like char*162acter, or for an extension of its business.” In allowing Public Service and Colorado Central to extend without Certificates, the majority is in conflict with the last clause of 115-5-1, supra, which prohibits extensions which interfere with the operation of other public utilities already constructed. The Commission is, by the majority opinion, effectively enjoined from exercising its statutory duty against Public Service or Colorado Central within the territory in controversy.
2. The interests of the public are supposed to be paramount. The Commission retained jurisdiction of this highly controversial and complex matter in order to administer case to case justice to the parties and so as to provide the public with the best possible service in the area. The Commission no doubt adopted this position in recognition of the fact that Public Service is equipped to serve urban and commercial areas, whereas Union has demonstrated the ability to serve the rural communities. The Commission has indicated that it would be guided by these and other considerations. The majority, however, without legal justification and without regard to the public interest has sweepingly declared that Public Service and Colorado Central have preemptive territorial rights merely upon the basis that they had stood ready to serve.
3. Union argues that our statute does not authorize the granting of territorial certification. They say that our statute recognizes only three kinds of certificates (1) to begin construction of a system, (2) certification to construct an extension, and (3) certification to operate under a franchise granted to it by a city. No specific provision is made in the statute for an area or territorial certification or for a general certificate such as here granted. Utility status is a factual determination. They rely on the decision of this Court in People v. Pirie, 78 Colo. 361, 242 P. 72. In this case, Pirie sought a Certificate of Public Convenience and Necessity to furnish electricity to the residents of Clear Creek County. The *163Commission enjoined him from operating within the limits of Idaho Springs. The issue arose in the case as to whether the order included territory outside of Idaho Springs. This Court held that the district court properly restricted the Commission’s order to Idaho Springs alone. The Court said that the applicant had a right to supply the inhabitants of the county outside of Idaho Springs and that the Colorado Power Company which had a franchise (and presumably a Certificate) to render service in Idaho Springs had not been serving the territory outside, the applicant was free to do so. In disposing of the contention of the Attorney General that the Commission had the authority to exclude the applicant from the entire county, the court speaking through Mr. Justice Campbell said:
“ * * * To the original application by the defendants for the Idaho Springs certificate objection was made by the Colorado Power Company which at the time, as held by the commission, was furnishing satisfactory service to the city and the certificate was refused. We are not now concerned with the denial order if it is restricted to Idaho Springs. As thus restricted it has been sanctioned by us in the case already cited. Assuming therefore, that Pirie and his successors have not the right to supply the inhabitants of Idaho Springs with electricity, this is not equivalent to saying that they have no right to supply consumers elsewhere in ‘territory’ outside the municipal limits. The Colorado Power Company has not supplied, but it has refused to extend its service to, the. town of Dumont and to other consumers in Clear Creek county outside the limits of Idaho Springs. We hold, therefore, that the district court, in restricting the order of the commission to Idaho Springs, was right, and also right in refusing to enjoin defendants from supplying electricity to the consumers in Clear Creek county not within the limits of that city.”
The issue in the above case was similar to that here .presented in that it refused to recognize an exclusive *164territorial right based upon mere presence. In other words, merely because a utility declares that it is ready, willing and able to serve an area it does not thereby acquire an exclusive right to do so. By holding that Public Service has an area certificate the doctrine of People v. Pirie, supra is silently repudiated.
4. By recognizing the territorial rights of Public Service on the basis of an expressed willingness to serve, the Court has in effect reenacted a statute which is popularly known as Section 36 (k) adopted in 1945 and which is reported in Chapter 195, 535, Session Laws 1945. This provision is quoted as follows:
“No cooperative electric association or non-profit corporation or association shall render electric service in territory already served by electric public utilities, whether the latter be municipally or privately owned or in territory which can be reasonably served by an existing public utility and in which territory such public utility does actually construct lines and agree to serve consumers promptly and within a reasonable time, unless a certificate shall first be obtained from the Commission that such service is in the public interest; provided, however, that nothing herein shall require discontinuance of service to consumers to whom service has been rendered heretofore.”
However, in the year 1949 this section was repealed. Chapter 204, p. 565, Session Laws 1949.
There can be no question but that Section 36 (k) raised the utility to a dominant position and relegated all cooperatives to a servient status, and the majority ruling accomplishes exactly the same thing while at the same time paying lip service to Union as a public utility. It is fair to assume that the Legislature by repealing Section 36 (k) declared a public policy contrary to the philosophy expressed in 36 (k). I now ask how can the Court conscientiously revive this repudiated philosophy.
5. By adopting a position which is much more far reaching and drastic in its implications and effects than *165the ruling of the Commission and the district court the majority has now injected into the case basic and fundamental constitutional questions. Furthermore, it has gone outside the issues raised by the briefs in order to do this.
For all of the above reasons, it is my opinion that the decision is ill founded. The Commission’s orders and the judgment of the district court should be affirmed with the exception noted above; or in the alternative if it is believed that the Commission’s findings are inconsistent in that they failed to recognize the facts indicating Union’s utility status prior to 1957 while now recognizing all their installations as those of a utility, I would say that there is ample justification for determining that Union was a utility long prior to the hearings and that Union is entitled to the rights as such which are granted by statute. This would bring about the desired consistency and achieve the Commission’s equitable result.
Finally, it should be again repeated that the paramount interest is that of the public. The rights of the parties are important, but these rights must give way when in conflict with the interests of the public. The judgment of the district court and the findings of the Commission recognized this, and should be affirmed.
Mr. Chief Justice Sutton and Mr. Justice Moore join in this dissent.