Court Opinion

ID: 8193791
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:16:56.258463+00
Date Added: 2024-06-11T16:40:41.708848
License: Public Domain

Eschweiler, J.
(dissenting). The net result of the majority opinion seems to be that in an attempt to drive the good ship Railroad Commission away from roaring Scylla it is now headed, with all sails set, straight for roaring Charybdis.
Possibly much of the difficulty that is here presented is due to a lack of proper co-ordination between the statutory regulation of public utilities and that of water powers. In 1905 and 1907 was inaugurated the era of strict control and regulation of public-service corporations. From that time on no steany railroad could lay a mile of new track, either main, branch, or extension, without having first obtained from the railroad commission a certificate that such was required as a public convenience and necessity. Secs. 1797— 39, 1797 — 44, Stats. No new service could be inaugurated by any other form of public utility until a similar certificate had been had as to public convenience and necessity. Sec. 1797m — 74.
Until 1911 it had been the established public policy of this state to recognize that the possibilities of harnessing the water powers in navigable streams in this state subject to the right to them as common highways reserved to the people by the Ordinance of 1787, art. 4, and our constitution, sec. 1, art. IX, was recognized as a legitimate subject of private ownership and vested in him who owned the banks of such stream. He had as to such the same right to contract as to the wheat that he raised in his fields. In 1911 a wide departure from such policy was attempted by the Water Power Act of that year. This act was held an invasion of such property rights under, the constitution. Water Power Cases, 148 Wis, 124, 134 N. W. 330. The amendment of 1913 was also held unconstitutional because omit*222ting any provision for judicial review as to the proposed taking of such private property. State ex rel. Owen v. Wisconsin-Minnesota L. & P. Co. 165 Wis. 430, 162 N. W. 433.
Finally, in 1915, by ch. 380 of that year, now ch. 31, Stats., quite complete control and regulation of all the water powers of this state was assumed by the legislature and to be administered by the already established railroad commission, and no question is here raised as to its validity.
It is important to notice that no provision is attempted to be made in the Water Power Act requiring a showing that public convenience and necessity requires any proposed dam before it may be lawfully constructed. The only time when such a certificate is a condition precedent is when an existing dam is proposed to be purchased by an existing public utility. Sec. 31.15, Stats. That the scope of investigation by the railroad commission as to applications to construct new dams or operate and maintain existing dams is more limited than those required as to other utilities as above quoted, is shown by secs. 31.05 to 31.08, Stats., inclusive.
No question is or can be raised but that the theory of the right of the legislature to assume such wide control and disposition of the water powers of the state is because of the interest the state as a whole has in the navigable waters of the state. This is a right vested in the entire people of the state as a class. In Rossmiller v. State, 114 Wis. 169, 187, 89 N. W. 839, it was held that the right of the people of the state at large as such a class to cut ice on navigable waters could not be destroyed by a taxation which had the purpose or. effect of the destruction of such right. It was further recognized in denying the right of a proposed drainage district near the Rock river to impair any of the substantial natural features of the river, or its navigation. In re Horicon D. Dist. 136 Wis. 227, 235, 116 N. W. 12. See, also, In re Dancy D. Dist. 129 Wis. 129, 140, 108 N. W. 202. There can therefore be no foundation for the *223assertion by any particular individual or any particular community to any preference whatsoever over another individual or municipality on account of geographical proximity to that which exists by reason of the state, as trustee for the people, assuming to regulate or control the water powers on navigable streams.
The majority have determined that the railroad commission acted contrary to the legislative command in treating the Loop System, that is, all the communities served with light and power on wires running from the Wissota dam, as a unit for rate-fixing purposes, and that the respective municipalities instead are such a rate-making unit. It is frankly conceded that there is no express or direct statutory language for such conclusion, and I think there is no support for it by implication.
It is stated by the majority opinion, and we all agree, that there is but one reasonable rate for the service ren- % dered by the public utility here in question. What such existing one reasonable rate is, when translated into concrete form in dollars and cents, is for the railroad commission to determine as an administrative question. Minneapolis, St. P. & S. S. M. R. Co. v. Railroad Comm. 136 Wis. 146, 163, 164, 116 N. W. 905.
Although the statutes do not expressly so provide, yet it is recognized as law and is so stated in the majority opinion that such reasonable rate must be the one which shall assure the utility a reasonable return upon the money invested. There can be no dispute as to this. Smith v. Railroad Comm. 169 Wis. 547, 553, 173 N. W. 312; Lincoln G. & E. L. Co. v. Lincoln, 250 U. S. 256, 267, 268, 39 Sup. Ct. 454. But such reasonable rate is not to be measured by a rate which stops just short of confiscation of the property of a utility, as seems to be the idea expressed in the majority opinion. A rate which does amount to confiscation is for that reason unreasonable, but it by no means follows that a rate stopping just short of such confiscation is necéssarily *224to be deemed a reasonable rate; it is so held in Minneapolis, St. P. & S. S. M. R. Co. v. Railroad Comm. 136 Wis. 146, 166, 167, 116 N. W. 905, supra.
The standard, therefore, for the establishment of rates by which the railroad commission must be governed in dealings between a public utility on the one hand and such of the state or public at large, either as municipalities or individuals, receiving service from such public utility on the other hand, must be the rate which will afford such a reasonable return to such public utility. If such rate is or seems to be unreasonable or excessive so far as the particular wants of any particular community or individual are concerned, the remedy is to obtain such service, if possible, from some other utility or by acquiring his or its own utility, as is expressly provided for in sec. 1797m — 74, Stats. But there cannot well be two distinct units for rate-making purposes in such a situation as is here presented. It involves contradiction in terms. ■ If each of the plaintiffs here is to be held as an independent unit for rate-making, then of course each of the other communities served must also be considered a separate unit, and hopeless confusion will be the result. To take a burden from one pair of shoulders, as will be done by the majority opinion, will necessarily place the same burden upon other shoulders, for the same burden must be carried somewhere. In my judgment the paramount unit for such purpose is clearly the utility.
By sec. 1797m — 5 provision is made for the commission valuing all the property of every public utility actually used and useful for the convenience of the public. Such valuation is one of the elements to' be considered in the fixing of the rates. The public there referred to can hardly mean less than the public at large as found in all of the several municipalities with which the utility deals. The broad scope to be given to' the term “public utility” as found in sec. 1797m — 1 is discussed fully in the case of Calumet S. Co. v. Chilton, 148 Wis. 334, 347, 135 N. W. 131; that case also *225holding that for the rights and privileges surrendered or taken a new privilege or monopoly (with former odious coloring extracted) is substituted (p. 358), and also indicating that diere was no restricted field intended even in the earlier days, saying (p. 364), “service to the public in the aggregate as well as in individual capacities was unmistakably included.” Having taken away from such public utility the right to make contracts for service at such rates and terms as might be agreed upon, the state has plainly declared that the rates which are to be fixed shall be measured by but one yardstick, and that is the one affording a reasonable return to the utility which has thus surrendered or lost its right to contract as such individual or unit. Such arrangements for rates are subject to change with changing conditions, but the standard does not and is not intended to vary.
Nowhere in the Public Utility Law is there evident any intention that such utility shall be dealt with in fragments or shall be limited in its service to but one municipality, nor can it be said that the permit to develop a water power under sec. 31.04, Stats., is limited to any single municipal service.
Manifestly the whole scope and purpose of the waterpower legislation is an emphatic negation of the idea that the utilization of the white-coal power of this state is upon the theory of the existence of the right to any special or particular advantage in any particular community or sets of individuals. It can consistently only be based upon the idea that the state is now controlling the making of contracts for services to be rendered for a quid pro quo as a trustee for all and not a few only of the people, and that the small and remote community within the radius of the commercially possible extension of the electrical energy developed under state control and regulation is entitled to equal consideration with the larger or nearer communities. This is further emphasized by the provision found in sec. 31.27, *226Stats., of the Water Power Act, giving the commission the power to declare any or all contracts entered into by such a water-power company for sales without the state of Wisconsin to be null 'and void if improvident. So that if there be, by i*eason of such contracts, an improper burden placed upon the people of this state, it is the legislative declaration that for the benefit of the people of this state such contracts may be declared null and void.
If the theory adopted by the majority opinion is the proper one as to water power, there would seem to be no reason why it would not be equally applicable as to steam-railroads and all other utilities. Then particular communities or those interested in particular commodities could insist on the same idea of adjustment of rates tO' be measured solely by the value of the service to such particular communities or such particular commodities instead of upon what is universally recognized as the basis for the fixing of reasonable rates as to' railroad and other utilities, namely, the consideration of the service as a whole and of the utility as a whole rather than of the particular service or particular community as the unit. The attempt by North Dakota to fix a rate for coal based upon such idea was denied in Northern Pac. R. Co. v. North Dakota, 236 U. S. 585, 599, 35 Sup. Ct. 429. The same idea as to separation was expressly denied in Milwaukee E. R. & L. Co. v. Railroad Comm. 171 Wis. 297, 177 N. W. 25, citing and following Puget Sound T., L. & P. Co. v. Reynolds, 244 U. S. 574, 581, 37 Sup. Ct. 705. The present holding evidently affects a substantial part of the business of the utility. It ought not t© be required, and cannot be compelled, to carry it on at a loss. Brooks-Scanlon Co. v. Railroad Comm. 251 U. S. 396, 399, 40 Sup. Ct. 183.
It seems clear to me that the result of the majority decision is to permit the plaintiffs in this case to- accomplish by judicial approval an effect exactly similar to that attempted but condemned in Kilbourn City v. Southern Wis. *227P. Co. 149 Wis. 168, 135 N. W. 499. Although in that case there is no express mention made of the fact that the waterpower company there involved was serving other patrons than those of the city of Kilbourn, yet there can be no question from the facts there shown, and we may well take judicial knowledge of it as a fact, that such power company was rendering and contemplating rendering service to a large number of consumers other than that village. In that opinion (p. 180) it is stated:
“The village of Kilbourn is one of the patrons of the defendant that is entitled to receive the same consideration in the matter of rates of charge that any other patron is entitled to receive; no less, no more. ... It is in the same situation that any private riparian owner would be who thought he had an opportunity to drive a hard bargain.”
There the village of Kilbourn had all the advantages as against the water-power company there involved that the plaintiff cities in this case have as against the present waterpower company, and more. Yet it was there held that under the idea of the Public Utility Law no preferences by one community over another could be claimed, and though the question of rate-making was not in that case, yet in a measure the same fundamental principles were involved as here.
It may well be that the classification made by the commission was improper and resulted in throwing an unwarranted burden, therefore, upon the plaintiffs, but as • but one question is disposed of by the majority I confine myself to that one only.
I am authorized to say that Mr. Justice Jones concurs in this dissent.
A motion for a rehearing was denied, with $25 costs, on October 10, 1922.