Court Opinion

ID: 4010423
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:12:09.489173+00
Date Added: 2024-06-11T07:44:42.857991
License: Public Domain

Action commenced October 10, 1936, under secs. 196.41
and 197.06, Stats., to set aside an order of the defendant Public Service Commission of Wisconsin entered July 13, 1936, fixing the just compensation and the terms and conditions for the taking by the, respondent village of Pardeeville of the property of the plaintiff-appellant Pardeeville Electric Light Company described in said order.  From a judgment entered January 2, 1940, affirming and approving the orders of the *Page 99 
Public Service Commission of July 13, 1936, and July 18, 1938, fixing the just compensation and the terms and conditions for the acquisition, the plaintiff brings this appeal.
In the statement of facts and opinion herein, the plaintiff-appellant Pardeeville Electric Light Company will be referred to as the "Electric Company," the respondent Public Service Commission of Wisconsin will be referred to as the "commission," the respondent village of Pardeeville will be referred to as the "village," and the Fox River Milling  Power Company will be referred to as the "Milling Company."
The proceedings by the village to acquire the property of the Electric Company used and useful for the convenience of the public were initiated by the village board on July 6, 1933.  At this meeting a resolution was adopted providing for consideration, at the next regular meeting of the village board to be held on July 17, 1933, of a resolution to acquire the property of the Electric Company, specifying the method of payment and providing for the submission of the question to a referendum vote.  At the meeting on July 17th, the village board adopted a resolution determining that it should acquire the property of the Electric Company used and useful for the convenience of the public, which property at that time consisted of a distribution system and certain generating equipment, to wit:  A small tract of land, a building thereon, and a generator, switchboard, regulator, bus supports, and other minor miscellaneous equipment used in connection with said land and building.  The resolution provided for submission of the question of acquisition to a vote of the public to be held August 1, 1933.
On July 17, 1933, the Milling Company was the owner of a gristmill and hydroelectric plant consisting of a dam, flowage rights, head and tailrace, and water wheel.  This company had been organized by Dr. Chandler in 1906.  Dr. Chandler had purchased the mill and hydroelectric plant in 1900.  Both of these properties were taken over by the Milling Company. *Page 100 
In 1909 an indeterminate permit was granted to this company to operate as a public utility under the indeterminate-permit law. (See Pardeeville E. L. Co. v. Public Service Comm.219 Wis. 482, 263 N.W. 366.) From 1909 until 1920 the Milling Company operated the entire utility in connection with the gristmill.  During a part of this time it operated a steam plant which has since been discarded.  It also rebuilt the dam, acquired flowage rights, and operated the hydroelectric plant.
In 1920 a new corporation known as the Pardeeville Electric Light Company was organized.  Through various conveyances the mill property, the dam and water wheel and flowage rights were vested in the Milling Company, and the property known as the distribution system, the land and buildings which housed the old steam plant and storage sheds and generator room which contained the generator, switchboard, exciter, and other minor miscellaneous equipment, was vested in the Electric Company.  After these transfers the Electric Company, as the owner of the distribution system, operated as a public utility in the village.  The Milling Company continued to own and operate the gristmill and the hydroelectric plant as a separate corporation.
In July, 1933, the Milling Company conveyed its hydroelectric plant to the Electric Company, the deed of conveyance being recorded on July 22, 1933.  When the village board learned that the hydroelectric plant had been purchased by the Electric Company, it canceled the referendum election scheduled for August 1st and fixed August 15, 1933, as the date for the referendum.  The reason for changing the date of the referendum was in order to make the resolution to be adopted by the village board, as well as the question to be submitted on the referendum ballot, more definite and certain. The electors voted two hundred thirty-seven in the affirmative to fifty-three against, whereupon the commission was notified of the result of the election and the determination of the *Page 101 
village to acquire the property of the Electric Company used and useful for the convenience of the public.
The commission held a hearing on December 4, 1933, at which testimony was introduced, including estimates of reproduction costs and of reproduction costs less depreciation by the chief engineers of the commission.  This hearing was adjourned until December 20, 1933, at which date further testimony was taken.  Further hearings and adjournments were had before the commission running through to September, 1934.  On September 20, 1934, the Pardeeville Electric Light Company and Dr. Joseph Chandler, as plaintiffs, commenced an action in the circuit court for Dane county against the Public Service Commission of Wisconsin and the village of Pardeeville to restrain the commission from proceeding further with proceedings instituted by the village for the purpose of acquiring the electric property of the plaintiffs.  The action was brought upon the ground that no verdict of a jury had been obtained upon the question of necessity for the taking, the plaintiffs' contention being that it (the Electric Company) was operating under an indeterminate permit arising from a franchise granted by the village in 1896 to one L.H. Rock for the furnishing of light and power by means of electric energy, and that the rights and privileges of Rock were thereafter conveyed through different parties to the Milling Company, and that on March 2, 1909, the village passed an ordinance which granted an indeterminate permit to the Milling Company, the Electric Company's predecessor in interest, to maintain and operate the electric plant and system in the village.  The court in that action held against the plaintiffs' contentions, holding that the plaintiff utility was operating under an indeterminate permit granted in 1909, and that there was no necessity for a jury verdict upon the question of necessity for the taking.  See Pardeeville E.L. Co. v. Public ServiceComm., supra. *Page 102 
Thereafter the commission proceeded to hold hearings to determine just compensation, etc.  Different hearings were held in January, February, and March of 1936.  The last hearing was concluded on March 18, 1936.  On July 13, 1936, the commission made its first order.  That order fixed the amount of just compensation for the property described in said order in the sum of $25,000.  This value was fixed as of December 31, 1935.  The order further provided "that in case of additions to or retirements from said property made by said Pardeeville Electric Light Company between December 31, 1935, and the date of the payment of the just compensation herein determined, the amount and value of resulting net additions or retirements may be agreed upon by and between the village of Pardeeville and the Pardeeville Electric Light Company, and the amount so agreed upon shall be added to (in case of net additions) or subtracted from (in case of net retirements) the amount otherwise herein fixed as constituting the value of the property of the Pardeeville Electric Light Company subject to acquisition in this proceeding."
While the commission's order fixes the amount of just compensation for the taking of plaintiff's property as of December 31, 1935, Commissioner Hunt testified:
"Q.  What date did you consider as the time of taking when you fixed the fair value?  A. When the community voted to take the plant [August 15, 1933]."
On August 1, 1936, plaintiff made application for a rehearing with respect to the matters determined by the order of July 13th.  The application was denied August 19, 1936. The present action was commenced October 10, 1936.  Subsequent to the commencement of this action a considerable portion of the property described in the order of July 13, 1936, was destroyed by fire.  The question then arose as to whether the resulting loss was the loss of the village or of the Electric Company.  By this time additional evidence had been taken *Page 103 
in the proceedings had in the circuit court.  This evidence was transmitted to the commission under sec. 196.44, Stats.  Because of the fire loss and the question as to which party should stand the loss, and in view of the additional testimony which had been taken in the court proceeding and transmitted to the commission, the commission on September 28, 1937, held a further hearing at which the commission decided that the loss resulting from the destruction of property by fire was the loss of the Electric Company, and that the property so destroyed should not be included in the property for which just compensation must be made by the village.  An order so providing was made by the commission on October 13, 1937. This order amended the commission's order of July 13, 1936.
On June 10, 1938, the circuit court for Dane county, Judge HOPPMANN presiding, held that the order of the commission dated July 13, 1936, and the order of October 13, 1937, amending the order of July 13, 1936, were both unlawful for the reason that, (1) all the commissioners then acting as such failed to hear or read all of the testimony and records introduced in the acquisition proceedings prior to the date of the entry of said order as provided by sub. (3) of sec. 196.24; (2) that the order was not based upon a hearing or examination by all of the members of the commission, of all of the testimony and records introduced, as required by sec. 196.24
(3); and (3) that the entry of said order (order of July 13, 1936) before all the commissioners had heard or read all of the testimony and exhibits introduced was in violation of the due-process clauses of the state and federal constitutions; that the order of October 13, 1937, was unlawful for the same reasons.  The court ordered that the record be remanded to the commission for further proceedings as required by law.
On July 18, 1938, the commission rescinded its order of July 13, 1936, as amended by its subsequent order of October 13, 1937, which orders the court had held to be unlawful, *Page 104 
and entered a new order wherein it fixed the amount of just compensation for the taking of the property, as described in its order, as the same was and existed on December 31, 1935, including the going value of the utility and all other proper allowances, but excluded the value of materials, supplies, and laboratory equipment on hand, or of subsequent additions or retirements, at the sum of $25,000.  The commission thereupon transmitted its order of July 18, 1938, and the record in the proceedings to the circuit court.  The only order then before the circuit court was the commission's order of July 18, 1938, the orders of July 13, 1936, and of October 13, 1937, having been held unlawful, were rescinded by the commission. It is the only order now before this court on appeal from the judgment herein, the circuit court having affirmed said order.
The following opinion was filed April 15, 1941:
The plaintiff Electric Company contends that the court erred in refusing to grant judgment dismissing the proceedings, (1) because the commission never acquired jurisdiction of the acquisition proceedings, or if it had, then it lost such jurisdiction by failure to follow statutory provisions; (2) that the commission had neither right nor jurisdiction to proceed until a court of competent jurisdiction had determined the ownership of the hydroelectric and other *Page 105 
property conveyed to the electric company in 1933.  It is further contended that the court erred in failing to adjudge the just compensation as determined by the commission to be unlawful because, (1) in the commission's order of July 13, 1936, just compensation was determined on the basis of value as of the date of the vote, August 15, 1933, instead of the date of the order, July 13, 1936; (2) that the second order of the commission dated October 13, 1937, determined the just compensation on the basis of the value as of August 15, 1933, instead of the date of the order; and (3) that the order of the commission of July 18, 1938, determined the just compensation on the basis of the value as of August 15, 1933, instead of the date of the order.  Other errors are assigned, but because of the view we take of this case, the additional errors need not be considered.
Plaintiff's contention that the commission never acquired jurisdiction in the acquisition proceedings is based upon the theory that this was a voluntary acquisition of utility property under sec. 66.06. (8), Stats., rather than an adversary proceeding under sec. 197.01 (3), Stats.  We think the initial proceeding taken by the village board on July 6, 1933, clearly shows that the proceedings were adversary under sec. 197.01
(3), Stats.  The resolution adopted by the village board reads in part as follows:
"Whereas, the village board is of the opinion that the public interest will be served by the purchase of the electric-utility plant and equipment owned by the Pardeeville Electric Light Company, used and useful for the convenience of the public, situated in the village and vicinity of Pardeeville, Wisconsin."
The resolution further provides:
"That the village of Pardeeville acquire said plant and equipment."
"Be it further resolved, that the question as to whether the village of Pardeeville shall acquire such plant and equipment *Page 106 
aforesaid shall be submitted to, a referendum vote of the electors of said village at a special election to be held on the 1st day of August, 1933, and that the question to be submitted shall be worded as follows:
"Question:  Shall the electric-utility plant and equipment owned by the Pardeeville Electric Light Company in the village of Pardeeville and vicinity, used and useful for the convenience of the public, be acquired by the village of Pardeeville?"
The notice of the referendum election and the question submitted to the electors indicates clearly adversary proceedings under sec. 197.01 (3), Stats.  The adversary character of the proceedings is more: definitely shown by the resolution of the village board adopted July 28, 1933, which canceled the referendum election to be held on August 1, 1933, and set a new date for August 15th.  That resolution in part reads as follows:
"Whereas, since the passage of said resolution relating to the acquisition aforesaid a purported transfer of the waterpower rights and other property of the Fox River Milling 
Power Company to the Pardeeville Electric Light Company has been recorded, which purports to show the Pardeeville Electric Light Company to be the owner of much more property than was covered or contemplated by the adoption of the resolution aforesaid;
"And whereas, some confusion has arisen as to what property is included in the resolution heretofore adopted and in the question heretofore ordered to be submitted to a vote of the people and it is now deemed necessary that the question submitted be so framed as to be understood by those voting in favor of or against the same at said special election;
"And whereas, it was the intention of the village board at the time of the passage of said resolution to acquire the property of the.  Pardeeville Electric Light Company used and useful for the convenience of the public in the village of Pardeeville and vicinity as set upon the books of the.  Public Service Commission of Wisconsin, namely the distribution system *Page 107 
together with certain generating equipment such as generator, switchboards, regulator, bus supports and building and land used in connection therewith;
"And whereas, it is the intention of the village board that this is the property to be acquired and the question submitted to the voters should so specify the same in order that there may be no misinformation with respect to what property is included in the question submitted."
In Lake Superior Dist. P. Co. v. Public Service Comm.235 Wis. 667, 673, 294 N.W. 45, the court said:
"It is considered that the contention of the plaintiff that the city initiated a proceeding for a negotiated purchase instead of an acquisition pursuant to sec. 197.01 (3), Stats., is not well taken.  The language of the resolution and the fact that all steps taken subsequent to its adoption were in accordance with the provisions relating to an acquisition as distinguished from a purchase confirms this conclusion."
The plaintiff argues that because the resolution and the notice of the referendum election provided that the property to be acquired could be paid for by the issuance of mortgage bonds, that fact indicates the proceedings were a voluntary acquisition under sec. 66.06 (8), Stats.  While that method of payment is applicable in voluntary acquisitions, it is also true that when the proceedings were instituted in the instant case, the same method of payment was permissible as provided by ch. 162, Laws of 1933.  This chapter became effective May 26, 1933.  It re-enacted sec. 66.06 (9) of the statutes and provides that bonds or mortgage certificates can be issued to provide for "purchasing, acquiring, teasing, constructing, extending, adding to, improving, conducting, controlling, operating, or managing a public utility."  It will be noted that ch. 162, Laws of 1933, was enacted to carry out the amendment of sec. 3, art. XI, of our state constitution, which was adopted in the general election of November, 1932, relating *Page 108 
to the financing of municipally owned public utilities and providing machinery for carrying out the amendment.  SeePayne v. Racine, 217 Wis. 550, 561, 259 N.W. 437.
We fail to find any support for the contention that the commission did not have jurisdiction in the acquisition proceedings or that it ever lost its jurisdiction.  However, there is a further reason why the plaintiff's contention must fail.  The issue as to the jurisdiction of the commission was pleaded, litigated, and decided adversely to the plaintiff's contention inPardeeville E.L. Co. v. Public Service Comm., supra.  That was an action commenced September 20, 1934, to restrain the commission from proceeding further with proceedings instituted by the village for the purpose of acquiring the electric property.  The parties here were parties to that action. Dr. Chandler, the principal stockholder of the Electric Company, joined as a plaintiff in the former action.  Among others, the following allegations are made in the complaint in that action:
"The electors of the village of Pardeeville, by a majority vote . . . determined to acquire the electric-utility plant and equipment owned by the Pardeeville Electric Light Company used and useful for the convenience of the public in said village of Pardeeville and vicinity."
"That because of the premises set out herein, the PublicService Commission is wholly without jurisdiction to furtherproceed, and if the commission does proceed, the plaintiffs will be irreparably injured. . . ."
Since it was decided in the former action that the commission had jurisdiction in the acquisition proceedings, the judgment in that action is final on the issue of jurisdiction as between the parties to the present action who were parties to that action.  State ex rel. Littig v. Superior Court, 231 Wis. 58,62, 285 N.W. 419; Milwaukee Automobile Ins. Co. v. Felten,229 Wis. 29, 33, 281 N.W. 637; Bentson v. Brown,191 Wis. 460, 462, 211 N.W. 132. *Page 109 
The question of the jurisdiction of the commission having been decided, plaintiff's contention that the commission had neither the right nor jurisdiction to proceed under existing circumstances until a court of competent jurisdiction had determined the ownership of the hydroelectric and other property conveyed to the Electric Company in July, 1933, is without merit.  The property to be acquired by the village is the property of the Electric Company set forth and defined in the resolution of the village board adopted July 28, 1933, and also described on the official referendum ballot.  Of course, the village cannot acquire property which the Electric Company does not own, and it does not seek to do so; neither is it required to take all of the property which the Electric Company owns.
The plaintiff contends that the just compensation as determined by the commission is unlawful because it was not fixed on the basis of the value as of July 18, 1938, the date of the commission's order.  The two former orders, that is, the order of July 13, 1936, and the order of October 13, 1937, were both declared unlawful by the trial court for the reasons hereinbefore stated, and were both thereafter rescinded by the commission.  The only order before the court now is the order of July 18, 1938, and it appears from the face of that order that the commission fixed the amount of just compensation as of December 31, 1935, two years six months and seventeen days prior to the date of the order (award).  In WisconsinP.  L. Co. v. Public Service Comm. 231 Wis. 390, 407,284 N.W. 586, 286 N.W. 392, the court said:
"The commission having ascertained just compensation on the basis of the value of the property as of June 27, 1933, when its award in fact was not made final until March 30, 1936, we see no escape from the conclusion that its orderfixing just compensation is unlawful."
The just compensation in that case was fixed on the basis of the value two years nine months and three days before the *Page 110 
date of the award.  The date of the award fixes the time of taking.  Wisconsin P.  L. Co. v. Public Service Comm.,supra, p. 402; Wisconsin P.  L. Co. v. Public Service Comm.232 Wis. 59, 66, 286 N.W. 588.  In both cases the court held that just compensation must be fixed as of the date of the commission's award.  We must hold that the commission's order fixing just compensation in the instant case is unlawful.
By the Court. — The judgment appealed from is reversed, and cause remanded with directions for the circuit court to enter judgment setting aside the order and for further proceedings according to law.
A motion for a rehearing was denied, without costs, on June 12, 1941.