145 Wis. 408 | Wis. | 1911
Lead Opinion
Secs. 9405 to 940/, Stats. (1898), relating to the sale of franchises by cities and villages has no bearing here other than, perhaps, as indicating legislative conception of the clearness required in conferring power on a municipality to regulate occupations for the purpose of public revenue. In that respect the difference between such sections and the one important to this case is quite striking as we ■shall see. While that circumstance may have been given rather too great significance in deciding the case below, as counsel for appellant suggests, the reasoning of the circuit judge by no means is illogical. The learned judge did not refer to such sections as indicating that the appellant did not possess competency to condition exercise of respondent’s franchise upon its paying a license tax in any other sense than that no such power was inferable from the mere existence of the municipal corporation with ordinary powers, and that no such authority was within the letter of the legislative language upon which appellant relied for its competency to act as a legislative agency. The suggestion of. counsel that ■such sections rather tend to show the contrary of the circuit
Unlike grants made under sec. 9406 and its associate sections, where they are made wholly by the state agency method and with the plainest of authority as to dealing with the matter on a public revenue basis, the franchise in this case came directly from the state under see. 17806 of the statutes. There was no municipal interference in the matter permissible, except such as was authorized by the words, “Any corporation . . . may, with the consent of and in the manner agreed upon with the authorities of any city or village, use any street,” etc. It is not perceived how power to attach to a state franchise a public revenue condition can be gathered from the quoted language under the rules governing the subject. Under such rules and the precedents, such language contemplates mere police regulations. They do not extend to licenses with revenue incidents in the nature of excise taxes, or otherwise. Wis. Tel. Co. v. Oshkosh, 62 Wis. 32, 21 N. W. 828; Marshfield v. Wis. Tel. Co. 102 Wis. 604, 78 N. W. 735; State ex rel. Wis. Tel. Co. v. Sheboygan, 111 Wis. 23, 86 N. W. 657; State ex rel. Wis. Tel. Co. v. Sheboygan, 114 Wis. 505, 90 N. W. 441; Wis. Tel. Co. v. Milwaukee, 126 Wis. 1, 104 N. W. 1009; State ex rel. Smythe v. Milwaukee Ind. Tel. Co. 133 Wis. 588, 114 N. W. 108, 315.
It is said such authorities do not apply since they deal only with sec. 1778, giving, as construed, telephone companies absolute right to use streets under police regulations, while sec. 17806 gives such right conditioned upon consent of the municipality being given andan agreement being made as to the manner of the use, the one conferring power of exclusion and the other not. True, but the fact remains, as we construe sec. 17806 that the consent and agreement mentioned appertain merely to police regulations.
In tbe first case cited it was held that express power to exclude does not give power to license and exact payments for revenue purposes. Here there was power to exclude or not at pleasure and to agree as to tbe manner of enjoying tbe consent in case of its being given. That came far short of conferring power to exact, as a condition of consent, payment of a license fee or tax of a contractual nature. Such a charge does not fall under tbe power, even to license, strictly so called, but rather tbe broader power to tax. State ex rel. Att’y Gen. v. Winnebago Lake & F. R. P. R. Co. 11 Wis. 35; State v. C. & N. W. R. Co. 132 Wis. 345, 112 N. W. 515; 2 Smith, Mun. Corp. § 1455.
Taxing laws are to be strictly construed, and that is peculiarly so as to such laws as tbe one under consideration. Probably such rule should be applied quite to tbe point of requiring words of unmistakable meaning to be used in conferring tbe power; words expressing tbe intention without going beyond tbe letter or necessary inference, where tbe effect would otherwise be not only to impose a tax of an excise character but impose it in addition to all other taxes of an ordinary character, as in this case. 2 Smith, Mun. Corp. § 145 6 and cases cited.
Neither in tbe foregoing nor in anything which may hereafter be said in this opinion, do we overlook what was held in Manitowoc v. Manitowoc & N. T. Co., ante, p. 13, 129 N. W. 925. Tbe questions there determined are:
(a) Sec. 1863, Stats. (1898), as amended by cb. 425,
(b) A feature so engrafted upon a corporate railway franchise and accepted as part of the grant, inheres therein and is subject to the reserved power of the state under the constitution to alter or amend;
(c) Power to a municipal or gmisi-publie corporation to make contracts affecting public interests, acting in its business capacity merely and dealing with proprietary rights, is mot to be inferred from the written law by doubtful construction;
(d) The power conferred upon cities respecting interurban railways under ch. 425, Laws of 1901, is that of acting ■as a state agency in moulding the character of corporate franchises of a particular kind and so subject to the reserved power to alter or amend;
(e) A franchise of the foregoing character, so far as it relates to the subject covered by ch. 362, Laws of 1905, while not superseded thereby is controlled by the language 'thereof requiring all charges for service dealt with by the act “to be reasonable and just” and prohibiting “every unjust and unreasonable charge for such service” and declaring every such charge “unlawful,” — to the extent that a condition of such a franchise limiting the rate of service from the grantee to a neighboring city is subject to the determination of the railroad commission, under the act of 1905, as to its reasonableness.
The citations and authorities referred to mirror the general trend of decisions and logic in support thereof respecting-interferences by municipalities with public utility corporations under a variety of conditions, somewhat similar to the one then in hand, without committing this court to all such decisions or such logic.
In the Manitowoc Case- the power challenged was found' very satisfactorily expressed in the statutes. The words-“upon such terms,” in connection with the words “subject to such rules and regulations” and the additional words “and: the payment of such license fees as the common council or board may prescribe,” were thought, by necessary inference if not in the letter, to confer power of a broad character,— clearly beyond mere police authority. The first group of words, standing alone, might be held referable to police authority from one viewpoint, but from another much more clearly referable to a broader power, or perhaps to both fields-of authority. But the second group refers distinctively to' police authority, rather negativing the idea that the first group was used in that field. Nor the same reason, as well as by the letter, it would seem that the last group refers quite-
The claim that it was beyond legislative power to supersede a contractual arrangement of the nature of the one in question, because of constitutional restrictions, needs but a brief notice.
The revenue element of the old franchise, as before indicated, was inherent in it and so inseparably connected with the privilege emanating from the state under sec. 17806 of the statutes. It was added by the municipality, acting as a state agency. The entirety was a state grant and so under legislative control like any other corporate state franchise. If in' that situation it could have any contractual features, protected from impairment by constitutional limitations, the only parties thereto were the state and the respondent. They mutually agreed to abrogate the franchise and, necessarily, as we shall see, the incidents attached by the state agency were abrogated likewise. Such mere incidents could not well in-ferably survive the primary thing.
"Whether mere contractual features, as between the state or any instrumentality used by it in conferring special privilege, and its grantee, inhering in the privilege itself, the franchise not being corporate, are within the reserved power to alter, amend, or repeal under sec. 1, art. XI, of the constitution, need not be discussed for the reason stated. "What the plaintiff did, if anything of a contractual nature, since it appertained to the franchise itself; the state did. [What the two
Though we thus leave a subject treated in the briefs of counsel, with passing notice, it is not to be taken as doubting the state of the law on the question. One needs, in respect to it, to distinguish between corporate franchises; in the sense of the right to corporate existence, and corporate franchises, as the term is often, not very accurately used; in the sense of, a privilege owned by a corporation in its proprietary capacity; a thing granted which when accepted is property,— may be acquired or parted with as any other property might, barring special legislative restrictions. State ex rel. Att'y Gen. v. Portage City W. Co. 107 Wis. 441, 83 N. W. 697; Linden L. Co. v. Milwaukee E. R. & L. Co. 107 Wis. 493, 514, 83 N. W. 851; In re Southern Wis. P. Co. 140 Wis. 245, 122 N. W. 801. The distinction has not always been appreciated as witness State ex rel. Att’y Gen. v. Madison St. R. Co. 72 Wis. 612, 40 N. W. 487; State ex rel. Cream City R. Co. v. Hilbert, 72 Wis. 184, 39 N. W. 326, and remarks with reference thereto in cases cited above and comparison therewith of Ashland v. Wheeler, 88 Wis. 607, 60 N. W. 818, and the language of and precise subject dealt with in sec. 1, art. XI, of the constitution.
Counsel cite Superior v. Douglas Co. Tel. Co. 141 Wis. 363, 122 N. W. 1023, respecting the foregoing matter; but, if it were not for the mutuality in the transaction in question, that adjudication would not have any bearing on the present case. There the contract was of the same nature as an ordinary agreement imier partes. It did not inhere in a franchise, corporate or otherwise. Moreover, it was of the species of private contracts expressly exempted from disturbance by sec. 1797m — 91, Stats. (Laws of 1907, ch. 499), of the public utility law.
Counsel for appellant, in respect to the subject last dis
If the propositions heretofore discussed were efficiently answerable in favor of appellant there would still remain a question striking at the very foundation of appellant’s claim, in that it involves whether the old franchise with its incidents did not cease to exist before commencement of the period for which such claim is made. More labor seems to have been put on this branch of the case by respondent’s counsel than any other. It is considered the presentation, under the' circumstances, merits such careful consideration as if the matter involved were necessarily vital to the appeal.
This is the question at this point: Is the indeterminate permit, respondent accepted in exchange for its privilege referable to sec. 17806 of the statutes, conditioned by appellant as aforesaid, — burdened like the former privilege with the element requiring payment to the municipality of two per cent, of gross earnings “in addition to such other taxes as are provided by law ?”
It is not likely the legislature supposed the law authorizing such exchanges of privileges as occurred would, or could, be regarded ambiguous respecting the scope either of the thing surrendered or that given back as an equivalent therefor.
The public utility law has been on the statute books so long that, probably, many franchises like the one in question have been given back to the state for so-called indeterminate per
The confusion created during, the years preceding the public utility law of 1907 by granting franchises in several different ways, — some directly by the state, some by cities as state agencies, some by the state in the main but with power to the various municipalities as state agencies to add supplementary features, fitting particular situations, some by the state without regard to local police regulations, and some likewise having such regard, either expressly or by necessary implication, some having contractual features creating doubt in regard to their constitutional status, and some having such features but without doubtful character, many of such matters being, in the ultimate, more or less detrimental to consumers, whether public or private, and proprietors as well, — ■ in the whole, created a perplexing situation in respect to harmonious administration. The legislature sought to deal efficiently with this mixed situation, the growth of years, by taking over existing franchises with the consent of owners, compensating them for co-operating to that end by conferring in each case of surrender a new franchise to do the things privileged under the old one with conditions referable only to the law itself, and so providing that subsequent original franchises conferred in whole or in part through state agencies would be likewise referable. The traffic thus sanctioned and invited as to existing franchises has been considerable and, as said before, with definite mutual ideas as to the status resulting from the exchange. The property interests involved have doubtless been very great, the number of persons directly and indirectly interested large, and the transactions numerous as well. Obviously any construction of the law running counter to the general view entertained in such transactions should be avoided if practicable.
If we concede, for the case, that, in a reasonable view, the
It is useless to extend this opinion further for the purpose of picturing the situation dealt with by the legislature. The magnitude of the task was great. Eew, if any, greater have been dealt with in our legislative history. The result stands significant as a monument to legislative wisdom. That such a complicated situation has been met by written law in such a way as to avoid successful attack up to this time on the validity of the law or any part of it, and avoid attack at all either upon the law or its administration, except in a very few instances, and secure optional submission by many owners of old franchises to a displacement of their privileges,— is quite a marvel; reflecting credit upon the lawmaking power and the body charged with the onerous duty of administering the statute, and challenging judicial attention to the importance of not, by construction, reading out of the enactment any meaning not clearly found there, — even to avoid a seemingly unlooked for disturbing consequence in a particular instance now and then, — which would tend to defeat the object of the law. ' The words of the enactment, dealing as it does with vast private and public interests, should, if practicable, be given a meaning so definite and comprehensive as to prevent any attempt to restrict it or extend it, so as to con
In view of tbe foregoing let us turn to these words in sec. 1797m — 77 (Laws of 1907, cb. 499) of tbe public utility law:
“Any public utility, being at tbe time a corporation duly organized under tbe laws of tbe state of Wisconsin, operating under an existing license, permit or franchise shall, upon filing at any time prior to tbe expiration of such license, permit or franchise and prior to July 1, 1908, with tbe clerk of tbe municipality which granted such franchise and with tbe commission, a written declaration legally executed that it surrenders such license, permit or franchise, receive by operation of law in lieu thereof, an indeterminate permit as provided in this act; and such public utility shall bold such permit under all tbe terms, conditions and limitations of this act. Tbe filing of such declaration shall be deemed a waiver by such public utility of tbe right to insist upon tbe fulfilment of any contract theretofore entered into relating to any rate, charge or service regulated by this act.”
Does not that language tell, without judicial aid, its own plain story, contemplating as to old franchises, in their en-tireties, a complete severance of all relations between sovereign authority, — whether exercised directly or through municipal agencies,- — -and the owners of the franchises, by an optional exchange of old ones for new ones, equivalent as to the privilege element, denominated. indeterminate permits. There is no suggestion in the statutes of coercion, no hint of a purpose to take away from franchise owners anything other than by their consent; exchanging in each case a privilege with new incidents for an old one with its incidents; a complete change from an existing to a new condition.
The idea that in case of an exchange under the statute any incident of the former privilege inherent in and forming a part of it in the nature of mutual obligations between the
The old franchise in question, like such franchises in general, contained many provisions relating to rates, charges, and service, and in close significant connection therewith and having, doubtless, a material bearing thereon, the obligation to pay the municipality the stipulated two per cent, on gross earnings. The tax, so called, could not come otherwise than from consumers and, therefore, to that extent enhance the cost of service to them. That burden had in the old grant, necessarily, compensatory features affecting rates. In the very nature of things the different features were not justly separable as they are not in case of franchises in general. So they were dealt with by the legislature as entireties, and the declaration as to the effect of the surrender of an old franchise was doubtless made to render that feature of the exchange from the old to the new condition unmistakable. Other provisions were added to the law in harmony therewith as we shall see.
“Every public utility is required to furnish reasonably adequate service and facilities. The charge made by any public utility for any heat, light, water or power produced, transmitted, delivered or furnished, . . . shall be reasonable and just, and every unjust or unreasonable charge for such service is prohibited and declared unlawful.”
The- scope of the new species of franchises, whether created by automatic operation of sec. 1797m — 77, or otherwise by direct or indirect state grant, or both, was clearly defined by sec. ,1797m — 1, subd. 5, in this language:
“The term 'indeterminate permit’ . . . shall mean . . . power, right or privilege to own, operate, manage or control any plant or equipment or any part of a plant or equipment within this state for the production, transmission, delivery or furnishing of heat, light, water or power, either directly or indirectly, to or for the public.”
The means for bringing all existing franchises of the nature referred to under the uniform system was clearly prescribed in sec. 1797m — 77, as before indicated, and the exact nature of the rights given for old franchises was defined by the words “shall . . . receive by operation of law in lieu thereof, an indeterminate permit . . . ; and such public utility shall hold such permit under all the terms, conditions and limitations of this act
Note the language; by necessary inference negativing the idea that the legislature contemplated the so-called indeterminate permit would be subject to any condition or limitation such as the two per cent, feature in question or any other of surrendered grants. No limitation or condition was in legislative contemplation, except those “of this act,” and except, manifestly, the scope of the privilege itself, and ordinary police regulations. Such privilege, it was thought, obviously, would be measured by the general purpose of the sur
So the thing existing after consummation of an exchange upon which respondent’s business was dependable, was the new privilege, emanating directly from the state, denominated an “indeterminate permit;” a permit to do the things theretofore licensed directly by the state and through the municipality as a state agency, but now unconditionally, except as specified in the public utility law. That it seems was the view of the administrative board in advising the public under date of June 11, 1908, that a permit obtained through operation of the public utility law is as broad as the franchise surrendered. Report of R. K Comm. 1908, p. 488. The idea suggested is that the new thing, as to the activities privileged, is like the old one and referable thereto, as to the scope of the privilege, and referable to the statutes as to conditions and limitations, thus cutting ofi all previous interferences inconsistent with such statute. Other administrative suggestions of the commission convey the same idea in letter or spirit.
The foregoing is evidenced by the character of the order of the commission considered by this court in Superior v. Douglas Co. Tel. Co. 141 Wis. 363, 122 N. W. 1023, treating a contract between a public utility corporation and the municipality as superseded by the statute. The decision by the commission was overruled but upon the ground, among others, that the arrangement between the corporation and the city was no part of the franchise; that it was like an ordinary contract which the city and the corporation had power to make in their business capacities.
Inferentially the court held that, except for the fact that the transaction — which was especially burdensome to the corporation — was not one inhering in the public franchise itself
The logic of the decision in State ex rel. Kenosha G. & E. Co. v. Kenosha E. R. Co., ante, p. 331, 129 N. W. 600, wherein the scope of the creation called an “indeterminate permit” and the purpose of the law in question was stated, is in harmony with the foregoing.
Any other meaning of the statute than indicated, it seems, would be contrary to its letter and spirit. The idea that the voluntary surrender of a franchise, containing burdensome conditions and involving complications prejudicial to attainment of the object of the invitation to franchise owners to make the exchange and their object in accepting the invitation, — still leaves such perplexities with efficient vitality attaching thereto and making them a part of the new privilege given for the old one, is so apparently out of harmony with the legislative scheme that unmistakable language to that effect would be required to warrant convicting the legislature of so intending. We find no such language, as we have seen, while, on the contrary, we find quite plain language and the whole spirit of the legislative plan negativing that idea. Doubtless, we reiterate, it was thought that sound policy required old franchises with their multiplicity of differences to be brought under one system- so that the things formerly privileged might continue to be so but solely under conditions and limitations referable to a single standard, to wit: the public utility law, with its administrative board to dominate the situation as between the owners of privileges and the public, to the end that each might be coerced, if need be, to deal justly with the other, accomplishing an era of fair exchange of equivalents involving service being furnished customers of the best character and at the lowest price practicable and without discrimination, and rendition therefor of such just and reasonable compensation as under the circumstances of each situation would enable performance of the mutual obli
To round out the plan aforesaid, it seems, making a complete system, encompassing future as well as existing conditions, old franchises were dealt with in one group giving them competency for exchange for new ones to be held subject to “the terms, conditions and limitations of this act,” and others were dealt with in a second group, by providing in sec. 1797m — 76, that every future grant “shall have the effect of an indeterminate permit subject to the provisions of this act;” power was given to municipalities, in general, in sec. 1797m — 87, “to determine by contract, ordinance or otherwise the quality and character of each kind of product or service to be furnished or rendered by any public utility furnishing any product or service within said municipality and all other terms and conditions not inconsistent with this act, upon which such public utility may be permitted to occupy the streets or other public property within such municipality,” subject to condemnation in whole or in part as void in case of the administrative board determining in due course “the contract, ordinance or other determination” to be unreasonable.
Thus all' the features of the law having to do with uniformity to effect the purposes mentioned in sec. 1797m — 8 were made to characterize future original grants in sec. 1797m — 76 by the words “subject to the provisions of this act” and to characterize all franchises given in exchange for
Tbe foregoing analysis- of tbe public utility law seems to demonstrate that retention of tbe special feature of tbe surrendered franchise in question as a feature of tbe new one, differentiating it from indeterminate permits in general, affording appellant, really at tbe expense of consumers, tbe benefit of two per cent, of respondent’s gross earnings, is plainly inconsistent with “tbe terms, conditions and limitations” of tbe public utility law which, as we have seen, it is declared over and over again therein shall characterize every indeterminate permit whether an original grant or a privilege given for an old franchise.
It follows that the order overruling the demurrer to the defense must be affirmed and the one overruling the demurrer to the counterclaim affirmed as well.
By the Court. — So ordered.
Dissenting Opinion
(dissenting). Sec. 1863, Stats. (Supp. 1906: Laws of 1901, ch. 425), empowers street and interurban railroad companies to run cars in the streets “with the consent of the common council.” Such consent “shall be given by ordinance, and upon such terms and subject to such rules and regulations and the payment of such license fees as the com
I fail to see where there is any material difference between the provisions of those two statutes and why they are not in pari materia so that one should receive the same construction as the other upon the question under consideration. The exaction in the case before us was denominated a tax in the ordinance, but in reality the transaction amounted to an agreement upon the part of the defendant to pay the amount stated for the privilege of using the streets of the city. There was no law prohibiting the city from entering into such an agreement, and I think the city had a perfect right to make it, and the defendant likewise was of the same opinion else it would not have paid the tax for a long series of years. It seems to me to be a mistake to say that the provision quoted from sec. 1780Z» confers only the police power of regulation on cities. Cities under the general police powers conferred on them had this power irrespective of such provision. State ex rel. Wis. Tel. Co. v. Sheboygan, 111 Wis. 23, 86 N. W. 657; Wis. Tel. Co. v. Milwaukee, 126 Wis. 1, 104 N. W. 1009; State ex rel. Smythe v. Milwaukee Ind. Tel. Co. 133 Wis. 588, 114 N. W. 108, 315. Under the grant of general police power a city could not prohibit a public utility operating under a franchise from the state from using its streets. It could only regulate such use. State ex rel. Wis. Tel. Co. v. Sheboygan, supra. Does any one doubt that under sec. 1780b
It seems to me we are in effect though not in words over- - ruling the Manitowoc Traction Company Case almost before it has had time to get to the printer. So I feel impelled to dissent from the view of the court herein that this ordinance was invalid in its inception in so far as it required the defendant to contribute two per cent, of its gross income to the •city. I also disagree with the other proposition decided in the case.
The indeterminate permit provided for by ch. 499, Laws ■of 1907, is nothing more nor less than a franchise. That law confers no franchise upon public utilities. Prior to its passage franchises were granted to some public utilities directly by the state by virtue of certain statutes, the statutes ■defining the nature and extent of the right conferred. Since the passage of the law, franchises, now called “indeterminate permits,” are conferred under these identical statutes. Prior to the passage of the law certain other franchises were •conferred by local municipalities acting under delegated power from the state. Since its passage indeterminate permits are granted by these local municipalities under this same delegated power. The former statutes under which franchises were granted have been amended in some particulars by the public utilities law. Eormerly a time limit was usually fixed. Now franchises are perpetual, subject as before to the legislative right of repeal. All corporations ac
Except as the power of a city to impose terms as a condition of granting the right to use its streets is expressly or by reasonable implication taken away by the 1907 law, it exists to the same extent that it did before. There is no express provision in the law abrogating such power, and I am unable to see where there is any repeal of these former statutory provisions by implication. There are some obvious advantages in placing the construction on the public utilities law that has 'been placed thereon in the majority opinion of the court, but this does not argue that the legislative intent has been expressed in that opinion. Laws are frequently the result of -compromises between conflicting interests. It is a matter of history that the public utilities law as originally drafted, was ■opposed by many of the cities in the state because it would
“Every municipal council shall have power: (1) To determine by contract, ordinance or otherwise the quality and character of each kind of product or service to be furnished or rendered by any public utility furnishing any product of [or] service within said municipality and all other terms and conditions not inconsistent with this act upon which such public utility may be permitted to occupy the streets, highways or other public property within such municipality, and such-contract, ordinance or other determination of such municipality shall be in force and prima facie reasonable.”
Here we have an express declaration that cities may prescribe the terms and conditions under which a public utility may be permitted to use its streets, provided such terms are-not inconsistent with said ch. 499. I fail to see where there-is a single requirement of the public utilities law that might not be carried out to its full, extent if we were to hold the provisions of the defendant’s franchise valid and binding in regard to the payment of the money involved. Ho provision of that law is pointed out that would conflict with this provision of the ordinance. There is no-satisfactory reason why cities may still grant rights and privileges under statutes existing when the public utilities law was passed, but must not couple these rights and privileges with conditions which they are empowered to impose by these same statutes.
Considerable stress is laid on sec. 1797m — 77 of the law,, which relates to the surrender of its franchise by an existing-corporation. It is very apparent that the legislature did not intend to differentiate between an existing corporation electing to come under the law and a new corporation organized after its passage. ,"Where there is a surrender of an existing-franchise the corporation receives in lieu thereof an inde