Court Opinion

ID: 9592110
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:10:26.43644+00
Date Added: 2024-06-11T18:01:15.359814
License: Public Domain

Mr. Justice Frantz
dissenting:
By holding that Colorado-Ute is what it cannot be, the majority has effectively incapacitated it as the supplier of energy for its members. The reasoning of the majority, simply stated, is this: Colorado-Ute is a public' utility. Its existence as a public utility is offensive to the law of this state relating to regulated monopolies. This conclusion flows from the finding of the Commission, supported by evidence, that there were other sources available from which the members of Colorado-Ute could obtain energy. There being other sources, the Hayden plant is a duplication of facilities, which effectually closes the door to any determination of convenience and necessity for its existence, the sine qua non for its justification.
Once the court accepts the premise that Colorado-Ute is a public utility, that which is then said logically follows. It is with the determination that Colorado-Ute is a public utility that I am in disagreement. In the operation of the Hayden plant, Colorado-Ute is not a public utility, and my view in this respect arises from three basic considerations: (1) Colorado-Ute is a cooperative corporation made up of thirteen members which are, in turn, corporate cooperatives, and for these thirteen members it will manufacture and sell electrical energy at wholesale; (2) the order of the Commission confined *289the sale of energy at wholesale to the thirteen members, thereby removing Colorado-Ute from the public utility concept of dedicating its property to public service or use; and (3) this court should not put an interpretation on the facts of this case which makes invalid our constitutional provision and the statutes relating to public utilities.
If in the operation of the Hayden plant, Colorado-Ute is not a public utility, a majority opinion to the contrary would have a devastating effect upon a legitimate enterprise for which there has been a very substantial investment. The importance of this decision as it relates in general to our public utilities law and in particular to the continuation of' the Hayden plant as a source of electrical energy places a heavy responsibility upon this court.
By Article XXV, the Constitution of Colorado vests the legislature with complete authority over public utilities “as presently or as may hereafter be defined * * * by the laws of the State of Colorado. . . .” For reasons which will be hereinafter stated, I take the position that any definition of a public utility must remain within the traditional concept of the term; that the legislature may not by fiat make enterprises, which would not fall within the traditional meaning of the term, public utilities.
Presently the term “public utility” is defined by statute. The definitive statute is C.R.S. 1963, 115-1-3. It provides:
“(1) The term ‘public utility’ * * * includes every common carrier, pipeline corporation, gas corporation, electrical corporation, telephone corporation, telegraph corporation, water corporation, person or municipality operating for the purpose of supplying the public for domestic, mechanical, or public uses, and every corporation, or person now or hereafter declared by law to be affected with a public interest, and each thereof, is hereby declared to be a public utility . . .
*290“(2) Every co-operative electric association, or nonprofit electric corporation or association, and every other supplier of electrical energy, whether supplying electric energy for the use of the public or for the use of its own members, is hereby declared to be affected with a public interest and to be a public utility . . .” (Emphasis supplied.)
Were the constitution and statute to be construed as applying to private corporations not serving the public, their invalidity would immediately arise because:
(1) such construction would unjustly interfere with private property rights in contravention of the due process clause of the 14th Amendment to the federal constitution;
(2) such construction would infringe upon private contractual rights which are protected by Article 1, Section 10 (1) of the federal constitution; and
(3) such construction would be in derogation of the Enabling Act, which recognizes implicitly property rights and the freedom to enter into private contracts.
Selecting only electric cooperatives for regulation as a public utility violates the equal protection clause of the 14th Amendment, and by reason thereof subsection 2 of C.R.S. 1963, 115-1-3, cannot be sustained.
In any consideration of the problem, it is necessary to revisit some fundamental law regarding public utilities. What makes an enterprise a public utility, and why is a public utility under some restraints which are not applicable to corporations not serving the public?
“A corporation becomes a public service corporation, subject to regulation by the department of public service, only when, and to the extent that, its business is dedicated or devoted to a public use. The test to be applied is whether or not the corporation holds itself out, expressly or impliedly, to supply its service or product for use either by the public as a class or by that portion of it that can be served by the utility, or whether, on the contrary, it merely offers to serve only particular *291individuals of its own selection.” (Emphasis supplied.) Inland Empire Rural E. v. Department of Public Service, 199 Wash. 527, 92 P.2d 258. In support of this proposition the Supreme Court of Washington cites a host of cases from states of the Union.
Our court has recognized the theory of law that a public utility embraces the idea that property must be devoted to a public use before it may be regulated as such. A public utility is “a system of works operated for public use, examples of which are telephone, street railway, water, electric light and power, gas works, and other systems.” Searle v. Town of Haxtun, 84 Colo. 494, 271 Pac. 629.
The court asked itself in Colorado Utilities Corporation v. Public Utilities Commission, 99 Colo. 189, 61 P.2d 849:
“Is Moffatt Coal Company, under the facts presented, a public utility within the meaning of the Public Utilities Act?”
and answered:
“* * * Moffatt Coal Company made no dedication of its property or any part thereof to a public use; it made no offer, and did not hold itself out, to serve the public as a public utility as such term is used in the statute above mentioned . . .”
To be a public utility “a business or enterprise must be impressed with a public interest and * * * those engagéd in the conduct thereof must hold themselves out as serving or ready to serve all members of the public, who may require it, to the extent of their capacity. The nature of the service must be such that all members of the public have an enforceable right to demand it.” (Emphasis supplied.) Englewood v. Denver, 123 Colo. 290, 229 P.2d 667; Public Utilities Commission v. Colorado Co., 142 Colo. 361, 351 P.2d 241.
Nowhere is the difference between operations subject to police power regulation and those subject to public utility regulation so well demarcated as in the leading *292case of Allen v. Railroad Commission, 179 Cal. 68, 175 Pac. 466, 8 A.L.R. 249. Since its language is precise and definitive, I quote from it extensively:
“* * * In its broadest sense everything upon which man bestows labor for purposes other than those for the benefit of his immediate family is impressed with a public use. No occupation escapes it, no merchant can avoid it, no professional man can deny it. As an illustrative type one may instance the butcher. He deals with the public; he invites and is urgent that the public should deal with him. The character of his business is such that under the police power of the state it may well be subject to regulation, and in many places and instances is so regulated. The preservation of cleanliness, the inspection of meats to see that they are wholesome, all such matters are within the due and reasonable regulatory powers of the state or nation. But these regulatory powers are not called into exercise because the butcher has devoted his property to public service so as to make it a public utility. He still has the unquestioned right to fix his prices; he still has the unquestioned right to say that he will or will not contract with any member of the public. What differentiates all these activities from a true public utility is this, and this only: That the devotion to public use must be of such character that the public generally, or that part of it which has been served and which has accepted the service, has the right to demand that that service shall be conducted, so long as it is continued, with reasonable efficiency under reasonable charges. Public use, then, means the use by the public and by every individual member of it, as a legal right.” (Emphasis supplied.)
Whether an electrical plant is a public utility “depends upon what it does and not upon the powers conferred upon it by charter.” Colorado Utilities Corp. v. Public Utilities Commission, supra. It is commonplace doctrine that “a private corporation cannot be converted into a public service corporation by mere legis*293lative fiat. What it does is the important thing, not what it, or the state, says it is.” Inland Empire Rural E. v. Department of Public Service, supra.
The statutory provision that enterprises “affected with a public interest” are public utilities has a narrow meaning— one in keeping with the customary concept of what constitutes a public utility. “Under our statute defining public utilities, Cobb’s pipe-line operations must be impressed with a public interest. That it is not so impressed is readily determined by the fact that plaintiffs here, and the public, have no right to demand the service. * * * It is a reiteration of the principles laid down in the Englewood case, supra, to say that before Cobb and his operations could be classified as a public utility, he must hold himself out as serving, or ready to serve, all members of the public who may require it.” (Emphasis supplied.) Parrish v. Public Utilities Commission, 134 Colo. 192, 301 P.2d 343.
In so limiting the scope of the term, “affected with a public interest,” our court is in harmony with the much-quoted definitive language of former Chief Justice Taft in the case of Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522, 43 S. Ct. 630, 67 L. Ed. 1103, 27 A.L.R. 1280, approved and followed in People ex rel. Industrial Commission v. Aladdin Theatre, 96 Colo. 527, 44 P.2d 1022: There Justice Taft said:
“Businesses said to be clothed with a public interest justifying some public regulation may be divided into three classes:
“(1) Those which are carried on under the authority of a public grant of privileges which either expressly or impliedly imposes the ¿ffirmative duty of rendering a public service demanded by any member of the public. Súch are the railroads, other common carriers and public utilities.
“(2) Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest times, has survived the period of arbitrary laws *294by Parliament or colonial legislatures for regulating all trades and callings. Such are those of the keepers of inns, cabs, and gristmills, [citing cases]
“(3) Businesses which, though not public at their inception, may be fairly said to have risen to be such, and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this is superimposed upon them. In the language of the cases, the owner, by devoting his business to the public use, in effect, grants the public an interest in that use, and subjects himself to public regulation to the extent of that interest, although the property continues to belong to its private owner, and to be entitled to protection accordingly.”
It appears to be a rule of general application that cooperatives serving only their own members are not public utilities. See Annotation in 132 A.L.R., at page 1498. But if they serve their members and others, or hold themselves out as willing to serve others, the majority rule appears to be that they are public utilities. Idem.
In Garkane Power Co. v. Public Service Commission, 98 Utah 466, 100 P.2d 571, 132 A.L.R. 1490, the same situation confronted the court as in our case — “the corporation [was] specifically prohibited from rendering service for or to the public”; it could only serve its members. In holding that the cooperative was not a public utility, the Supreme Court of Utah uttered these words:
“* * * So long as a cooperative serves only its own owner-members and so long as it has the right to select those who become members, ordinarily it matters not that 5 or 1000 people are members or that a few or all the people of a given area are accorded membership, provided the arrangement is a bona fide cooperative or private service organization and is not a device prepared and operated to evade or circumvent the law.”
To like effect, see Socorro Elec. Coop. Inc. v. Public Service Co., 66 N.M. 343, 348 P.2d 88.
*295To hold that a cooperative corporation, created to manufacture and sell at wholesale to thirteen incorporated cooperatives, who sell at retail, is a public utility by giving the statutory definition a strange and unconventional meaning leads to unconstitutionality. To place a corporation not purposing to serve the public indiscriminately in the status of a public utility means (1) that it must sell to all whom it physically can serve rather than retain its constitutional right of being at liberty to contract with whom it pleases, and (2) that, although its operation is limited, its property is by decree dedicated to a public use, a taking of property without due process.
Courts have sometimes used one or the other of these constitutional barriers to stay the hands of states which would make a business a public utility, when in fact it was not one. And sometimes they have used both grounds. There will be no attempt here to segregate them. Mr. Chief Justice Taft forewarns of constitutional impediments involved in an effort by the state to enlarge the scope of the “public interest” by legislation in the case of Wolff Packing Co. v. Court of Industrial Relations, supra, saying:
“If, as, in effect, contended by counsel for the state, the common callings are clothed with a public interest by a mere legislative declaration, which necessarily authorizes full and comprehensive regulation within legislative discretion, there must be a revolution in the relation of government to general business. This will be running the public-interest argument into the ground, to use a phrase of Mr. Justice Bradley when characterizing a similarly extreme contention. Civil Rights Cases, 109 U.S. 3, 24, 27 L. Ed. 835, 843, 3 Sup. Ct. Rep. 18. It will be impossible to reconcile such result with the freedom of contract and of labor secured by the 14th Amendment.”
The Supreme Court of the United States, in addressing itself to the contention of the plaintiff in error in *296the case of Producers Transportation Co. v. Railroad Commission, 251 U.S. 228, 40 S.Ct. 131, 64 L.Ed. 239, used language that is most apt:
“It is, of course, true that if the pipe line was constructed solely to carry oil for particular producers under strictly private contracts and never was devoted by its owner to public use, that is, to carrying for the public, the State could not by mere legislative fiat or by any regulating order of a commission convert it into a public utility or make its owner a common carrier; for that would be taking private property for public use without just compensation, which no State can do consistently with the due process of law clause of the Fourteenth Amendment.” (Emphasis supplied.)
The Supreme Court of the United States considered the status of a private carrier who was limited to transportation in interstate commerce under three contracts and had not undertaken to carry for the public nor to devote his property to any public use, Michigan Public Utilities Commission v. Duke, 266 U.S. 570, 45 S.Ct. 191, 69 L.Ed. 445, 36 A.L.R. 1105. The Court admonished that “it is beyond the power of the State by legislative fiat to convert property used exclusively in the business of a private carrier into a public utility, or to make the owner a public carrier, for that would be taking private property for public use without just compensation, which no State can do consistently with the due process of law clause of the Fourteenth Amendment. Producers Transportation Co. v. Railroad Commission, 251 U.S. 228, 230; Wolff Co. v. Industrial Court, 262 U.S. 522, 535. On the facts above referred to, it is clear that, if enforced against him, the act would deprive plaintiff of his property in violation of that clause of the Constitution.”
In Frost Trucking Co. v. Railroad Commission, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101, 47 A.L.R. 457, the Supreme Court of the United States considered a statute of the state of California, the Supreme Court of which had construed a provision of the state statute as requir*297ing a private contract carrier to obtain a certificate of public convenience and necessity before doing business over the state highways, as a condition obliging dedication of the carrier’s property to the business of public transportation, thereby subjecting him to all the duties and burdens imposed by the act upon common carriers. The Court declared: “That, consistently with the due process clause of the Fourteenth Amendment, a private carrier cannot be converted against his will into a common carrier by mere legislative command, is a rule not open to doubt and is not brought into question here.”
Smith v. Cahoon, 283 U.S. 553, 51 S.Ct. 582, 75 L.Ed. 1264, involved the constitutionality of the Florida statute covering carriers. Its constitutionality was challenged on the ground that it was repugnant to the due process and equal protection clauses of the 14th Amendment to the federal constitution. Relying upon the Duke and Frost cases, supra, the Court said that “such a scheme of regulation of the business of a private carrier, such as the appellant, is manifestly beyond the power of the State.”
Stephenson v. Binford, 287 U.S. 251 53 S.Ct. 181, 77 L.Ed 288, 87 A.L.R. 721, confirms the view that the state cannot by legislative fiat convert property used exclusively in the business of a private carrier into a public utility or make the owner thereof a public utility, since that would be the taking of private property for public use without just compensation, in violation of the due process clause of the 14th Amendment.
There are many state decisions which have followed these federal cases. Only a few typical cases need be cited.
Allen v. Railroad Commission, supra, declares:
“ ‘Our Constitution and our statutory definitions above quoted therefore must be construed as applying only to such properties as have in fact been devoted to a public use, and not as an effort to impress with a public use properties which have not been devoted thereto. For *298if the latter be the true construction of our Constitution and statutes, then manifestly in their operation they are void wherever they unjustly interfere with private property or private contractual rights by force of article 1, § 10, and of the Fourteenth Amendment of the Constitution of the United States. If the first alternative be selected, then, for reasons already given, such parts of these properties as are affected by the contracts with these petitioners have not been devoted to public use and their private contractual rights must prevail.”
In the Allen case, the constitutional provision is quite like our constitutional provision, ordaining that “every class of private corporations, individuals or associations of individuals, hereafter declared by the legislature to be public utilities, shall likewise be subject to such control and regulation.” The court in that case in effect requires the traditional meaning to be given to the term “public utilities.”
Dairymen’s Coop. Sales Ass’n v. Public Service Commission, 318 Pa. 381, 177 Atl. 770, 98 A.L.R. 218; Hertz Drivurself Stations v. Siggins, 359 Pa. 25, 58 A.2d 464; and Inland Empire Rural E. v. Public Service Commission, supra, are a few other instructive cases. In. the last case a true cooperative,' one serving only its members, was involved.
The Allen case, supra, is of utmost importance because of the constitutional authority in the legislature, as in ours, to define a public utility. It was held that this was not a carte blanche authority; that the definition would have to conform to the one traditionally used in order to avoid federal unconstitutionality.
The Inland Empire case, supra, is equally important, because it was a cooperative serving only its members, and the Supreme Court of Washington observed that any attempt to hold its operation to be a public utility would run afoul of the protections of the 14th Amendment to the United States Constitution.
The Enabling Act is the paramount law of this state *299and all constitutional provisions of our fundamental state document must be consistent with it. In the event of a conflict the constitution must yield to the Enabling Act. The Enabling Act directed the Constitutional Convention of this state to form a constitution which would “not be repugnant to the constitution of the United States and the principles of the declaration of independence.” Section 4. Both the Federal Constitution and the Declaration of Independence recognize the rights to life, liberty, and the pursuit of happiness. This word “liberty” has been construed to include freedom to contract and freedom to hold property under appropriate regulations where such are necessary.
An Enabling Act becomes “and is a fundamental and paramount law. It cannot be altered, changed, amended, or disregarded without an act of Congress.” A state constitution “cannot be inconsistent with the Enabling Act.” Murphy v. State, 65 Ariz. 338, 181 P.2d 336.
The term “liberty” appearing in the Declaration of Independence has the same meaning as it has in the federal and state constitutions. See McKinster v. Sager, 163 Ind. 671, 72 N.E. 854, 68 L.R.A. 273. Freedom to contract is embraced within the term “liberty” as used in these documents. 16 Am. Jur. 2d, pages 704-706, substantiates the assertion:
“Although the term ‘freedom of contract’ does not appear in the Constitution, the right to enter into a contract, with some exceptions, is a liberty which falls within the protection of the due process clause of the Fourteenth and Fifth Amendments to the Constitution of the United States. It is also safeguarded by the constitutions of the states, and, by a constitutional guaranty of pursuit of happiness. In general it may be said that the privilege of contracting is both a liberty and a property right.”
It seems obvious to me that the selection of electrical cooperatives as being public utilities, subject to the restraints under which they operate, and leaving gas, tele*300phone, carrier, and other cooperatives outside the definition, constitutes a classification in violation of the equal protection provision of the 14th Amendment. In this respect I believe that the opinion of Mr. Chief Justice Harris of the Supreme Court of Arkansas, in the case of Arkansas Commerce Commission v. Arkansas & Ozarks Railway Co., 235 Ark. 89, 357 S.W.2d 295, has some relevance. Attention is also called to the case of Evansville & Ohio Valley Ry. Co. v. Southern Ind. Rural Electric Corp., 231 Ind. 648, 109 N.E.2d 901.
C.R.S. ’53, 115-1-3, has been unjustifiably broadened by the majority to thereby make Colorado-Ute a public utility within the breadth of the statute’s language. Cooperatives are of two kinds: those which serve only their members, and those which serve their members and the public. See 132 A.L.R. 1490, and annotation. The statute is so drafted that it covers both, and in each instance the members or public are consumers of the electrical energy. To bring a cooperative which shall manufacture and sell at wholesale for a few cooperatives (retailers) within the purport of the statute is an unwarranted extension of the statute, and for reasons already stated, violative of the federal constitution.
The enigmatic status of Colorado-Ute pervades the record of this case. An additional oral argument was ordered by this court, in which the parties were directed to answer certain questions propounded by the court relating to its status as a public utility. Public Service and Western relied upon the statute, while Colorado-Ute’s position was one difficult to assess. However, the latter confessed that it had problems in reconciling Colorado-Ute’s limited operation with that which is ordinarily believed to be the sphere of action of a public utility.
■Commissioner Horton stated “that there is a very serious doubt in the mind of the Commission that the legislative intent was to require Ute to obtain a certificate *301of public convenience and necessity to construct a plant at Hayden to serve its members.”
In its opening brief (page 108) Colorado-Ute points to C.R.S. ’53, 115-1-3, for an answer to the following comment and question:
“Accordingly, it is perfectly clear from the record that Colorado-Ute is a wholesaler of electric energy to its members only, and the areas in Colorado served by these members is clearly shown on Exhibit 9 . . . Does such a status make it a public utility?”
Since cooperatives, such as those involved in this case, have an impact upon public utilities supplying electrical energy, it is right and proper that they be regulated, not as public utilities, but as business impressed with the public interest. What governmental agency is better situated to perform this function than the Public Utilities Commission?
I would sustain the Commission upon the basis that its action was regulatory under the statute, and that any part of its decision in excess of regulation is without force and effect.
Mr. Justice Moore: