VILLAGE OF GRAFTON, APPELLEE, v. OHIO EDISON COMPANY ET AL., APPELLANTS.
No. 95-572
SUPREME COURT OF OHIO
Submitted May 1, 1996—Decided November 13, 1996.
77 Ohio St.3d 102 | 1996-Ohio-336
APPEAL from the Court of Appeals for Lorain County, No. 94CA5877.
{¶ 1} On May 1, 1962, the village of Grafton granted the Ohio Edison Company a twenty-five-year, nonexclusive franchise to provide electric service to two commercial/industrial customers inside Grafton and to transport electrical energy through Grafton for use outside Grafton:
“Section 1. Ohio Edison Company * * * is hereby granted, for a period of twenty-five (25) years from the date of the filing of its acceptance hereof * * * the right and privilege to erect, construct, operate and maintain electric facilities, including without limitation poles * * * and all necessary fixtures and appurtenances, in, along, [and] over * * * the streets, alleys, public ways and grounds of the Village of Grafton.
“Section 2. Ohio Edison Company may exercise the rights granted in Section 1 of this Ordinance only to the extent reasonably necessary for the purpose of transmitting electric energy through the Village from points outside the corporate limits of the Village to other points outside said corporate limits, and for the purpose of supplying electrical energy to Sunshine Biscuits, Inc. Milling Division and W.O. Larson Foundry Co., or their successors and assigns.
“* * *
“Section 6. It is understood and agreed that the rights and privileges granted herein shall not be or be considered an exclusive grant and nothing in this ordinance shall in any way affect, restrict or abridge the rights of the Village of Grafton, at any time, to grant similar rights and privileges to any other person.” (Emphasis added.)
{¶ 2} In 1947, Grafton had granted Ohio Edison‘s predecessor in interest a fifteen-year franchise to maintain and operate an existing system for the transmission and distribution of electrical power, and to extend service to three specified customers.1 These franchise agreements expired by their own terms in 1962 and 1987. Ohio Edison did not seek to renew its limited franchises.
{¶ 3} Grafton provides electric service to its inhabitants through its own electric department. Following expiration of the franchises, Ohio Edison still serves customers that it had served under the franchises, but has also initiated service to two newly developed commercial properties, those of Design Management Company (“Design“) in 1992 and Rite Aid of Ohio, Inc. (“Rite Aid“) in 1993. Design and Rite Aid were not part of the limited franchises. Ohio Edison ran separate service lines (including step-down transformers and other equipment) to Design and to Rite Aid from an existing Ohio Edison transmission line running within the Design and the Rite Aid properties. The service lines to Design and Rite Aid do not cross Grafton‘s public lands or rights-of-way. Grafton has electric poles and lines capable of serving Design and Rite Aid on or near both properties.
{¶ 4} In 1992, Grafton brought an action for injunctive and declaratory relief and damages in the common pleas court relating to Ohio Edison‘s construction of the new service lines and provision of electric service to Design and Rite Aid. Ohio Edison filed a counterclaim against Grafton for tortious interference with business relations. Grafton, Ohio Edison, Rite Aid, and Design each moved for summary judgment on the various claims and the counterclaims.
{¶ 5} The trial court found that Grafton could compel Ohio Edison to stop serving Design and Rite Aid because Ohio Edison had commenced service to these two customers after the expiration of the franchise agreement. The trial court noted that Grafton would be required to seek permission from the Public Utilities Commission of Ohio to terminate Ohio Edison‘s service to its pre-1987 customers, but held that Grafton need not make such an application in this case because Grafton was merely exercising its municipal utility authority under
{¶ 6} As to its declaratory judgment, the court determined that there was no just reason for delay. Ohio Edison and Design appealed, arguing that Grafton could not stop Ohio Edison‘s continued service to any of its customers, irrespective of when they began receiving that service, without first obtaining commission permission under the Miller Act. The court of appeals disagreed, holding that the Miller Act did not apply in this case.
{¶ 8} The cause is now before this court upon the allowance of a motion to certify the record.
Corso & Lillie Co., L.P.A., and Richard G. Lillie, for appellee.
Jones, Day, Reavis & Pogue and David A. Kutik; Cook & Batista Co., L.P.A., and Daniel P. Batista, for appellants.
Chester, Willcox, & Saxbe, John W. Bentine and Jeffrey L. Small, urging affirmance for amicus curiae American Municipal Power - Ohio.
Robert S. Tongren, Consumers’ Counsel, and Barry Cohen, Assistant Consumers’ Counsel, urging reversal for amicus curiae Office of Consumers’ Counsel.
Porter, Wright, Morris & Arthur, Samuel H. Porter, Alan D. Wright, Kathleen M. Trafford, Daniel R. Conway and Alaine Y. Miller, urging reversal for amicus curiae Ohio Electric Utility Institute.
Betty D. Montgomery, Attorney General, Duane W. Luckey and Ann E. Henkener, Assistant Attorneys General, urging reversal for amicus curiae Public Utilities Commission of Ohio.
Per Curiam.
{¶ 9} Appellants pose three propositions of law, arguing that the Miller Act prevents Grafton from terminating Ohio Edison‘s service to Design and Rite Aid without commission approval. For the reasons that follow, we hold that the Miller Act does not prevent Grafton from forcing Ohio Edison to abandon the Design and Rite Aid electric lines.
{¶ 10} In order to obtain summary judgment, the movant must show that (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion when viewing evidence in favor of the nonmoving party, and that conclusion is adverse to the nonmoving party. State ex rel. Cassels v. Dayton City School Dist. Bd. of Edn. (1994), 69 Ohio St.3d 217, 219, 631 N.E.2d 150, 152. This court has complete and independent power of review as to all questions of law. MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 268, 527 N.E.2d 777, 780;
{¶ 11} This case involves the interrelationship between the Miller Act,
{¶ 12} Under
{¶ 13} However, municipal utility operations are subject to statewide police power limitations for health and safety reasons. See Canton v. Whitman (1975), 44 Ohio St.2d 62, 73 O.O.2d 285, 337 N.E.2d 766; Delaware Cty. Bd. of Commrs. v. Columbus (1986), 26 Ohio St.3d 179, 184, 26 OBR 154, 158-159, 497 N.E.2d 1112, 1117; Columbus v. Teater (1978), 53 Ohio St.2d 253, 260-261, 7 O.O.3d 410, 414, 374 N.E.2d 154, 159. Moreover, the Miller Act requires municipalities to obtain commission approval before forcing the abandonment of nonmunicipal utility facilities or the withdrawal of nonmunicipal utility services located inside the municipality. State ex rel. Klapp v. Dayton Power & Light Co. (1967), 10 Ohio St.2d 14, 39 O.O.2d 9, 225 N.E.2d 230; State ex rel. Wear v. Cincinnati & Lake Erie RR. Co. (1934), 128 Ohio St. 95, 190 N.E. 224. Thus, under the Miller Act, a municipality generally must seek commission approval before forcing a utility to stop serving customers or to abandon its electric lines inside the municipal limits. Id.
{¶ 14} However, Grafton asserts that the Miller Act does not apply in this case because the Design and Rite Aid service lines are service lines for individual customers and not a “main” electric line and because Ohio Edison improperly initiated service to Design and Rite Aid after expiration of the nonexclusive franchise. Grafton is correct only on the second ground. We discussed Grafton‘s first issue in detail in State ex rel. Toledo Edison v. Clyde (1996), 76 Ohio St.3d 508, 668 N.E.2d 498, holding that the Miller Act applies to the forced abandonment of or withdrawal of service over all electric lines, regardless of size. However, for the reasons set forth below, we find that the Miller Act does not apply in this case because Ohio Edison wrongfully initiated service to Design and Rite Aid.
{¶ 16} Grafton argues that Ohio Edison‘s extension of service to Design and Rite Aid was wrongful and violated Grafton‘s exclusive right to provide utility service to its inhabitants. Grafton is correct.
{¶ 17} Ohio Edison was never granted a village-wide franchise to serve Grafton‘s inhabitants. From their inception, Ohio Edison‘s franchises were limited to maintaining a transmission and distribution system within Grafton, to serving only specific customers (or their successors and assigns), and to transporting electricity through Grafton for use solely outside Grafton. Thus, Ohio Edison had no right under its franchises to extend service to additional customers inside Grafton‘s municipal limits, including service to Design or Rite Aid.
{¶ 18} Moreover, Grafton had the right to create a municipal utility monopoly inside Grafton and exclude Ohio Edison from serving Grafton‘s inhabitants. See State ex rel. Toledo Edison, supra, 76 Ohio St.3d at 517, 668 N.E.2d at 505. This position stems from an exclusive grant of power to municipalities in
{¶ 19} Ohio Edison‘s franchises expired in 1962 and 1987. Thus, Ohio Edison never had a right to serve any of Grafton‘s inhabitants other than those specified in these franchises. Ohio Edison never sought to renew or expand the scope of its Grafton franchises, and Grafton took no affirmative steps to prevent Ohio Edison from doing so. However, Grafton was not required to do so. The limited reach of the original franchises made it clear that service to any additional or new customers was beyond the scope of those franchises and wrongful.
{¶ 20} Ohio Edison was an occupant at sufferance inside Grafton‘s municipal limits once the franchise contract expired. State ex rel. Klapp v. Dayton Power & Light Co. (S.D. Ohio 1957), 170 F. Supp. 722, 725, affirmed in (C.A.6 1959), 263 F.2d 909, reversed on other grounds (1959), 359 U.S. 552, 79 S.Ct. 115, 3 L.Ed.2d 1035. “Mere acquiescence in the continued unauthorized occupancy of the streets, or non-action on the part of public officials to prevent obstruction, or delay in bringing action to procure an order of ouster, could not serve to confer any right upon the defendant company or estop the city from maintaining this proceeding [for ouster].” Ohio Elec. Power Co. v. State ex rel. Martin (1929), 121 Ohio St. 235, 240, 167 N.E. 877, 878.
{¶ 21} Thus, although Ohio Edison‘s right to continue serving customers that it served under its franchises is secure under the Miller Act, Ohio Edison‘s right to serve new customers inside Grafton‘s municipal boundaries certainly would not grow merely because Grafton took no affirmative steps to prevent such an expansion. In State ex rel. Toledo Edison, supra, 76 Ohio St.3d 508, 668 N.E.2d 498, we held that expansion of Toledo Edison‘s customer base after expiration of a franchise was protected under the Miller Act until Clyde took affirmative action, by ordinance, to assert its right to control utility services. But Toledo Edison had had a franchise to serve all of Clyde‘s inhabitants. By contrast, the expiration of narrowly drawn, specified-customer franchises, like the ones at bar, does not confer more rights on Ohio Edison than it had under the original franchises.3 Ohio Edison cannot intend to argue that the expiration of these franchises somehow imbued it with rights to expand its service territory and serve new customers inside Grafton‘s municipal limits that are superior to Grafton‘s right to serve its citizens.
{¶ 22} Ohio Edison argues that it was required to provide service to Design and Rite Aid under the Certified Territory Act and
{¶ 23} The Certified Territory Act expressly provides that Ohio Edison had no right to serve any customer inside Grafton‘s municipal limits without Grafton‘s consent:
“Except as otherwise provided in this section and
Article XVIII of the Ohio Constitution , each electric supplier shall have the exclusive right to furnish electric service to all electric load centers located presently or in the future within its certified territory, * * * provided that nothing in [the Certified Territory Act] shall impair the power of municipal corporations to require franchises or contracts forthe provision of electric service within their boundaries * * *.” (Emphasis added.) R.C. 4933.83(A) .
{¶ 24} Ohio Edison knew that its franchises permitted service only to the individual customers identified in the franchises. Design and Rite Aid are not the customers named in the franchises. Nor did Ohio Edison seek or obtain Grafton‘s consent to provide service to Design or Rite Aid. Under these circumstances, erection of the two service lines in question was not permitted under the franchises or the Certified Territory Act and was improper.
{¶ 25} Ohio Edison asserts that, irrespective of how the Design and Rite Aid service lines came into being, abandonment of the lines or termination of the service over those lines requires commission approval. Thus, Ohio Edison poses the question of whether forcing the abandonment of two electric lines erected in violation of Grafton‘s constitutional right to control the provision of electric services to its inhabitants requires commission approval. We find that it does not.
{¶ 26} The Miller Act applies to the forced abandonment of any electric line or the service over that line. State ex rel. Toledo Edison, supra, 76 Ohio St.3d at 515, 668 N.E.2d at 503;
{¶ 27} This policy is also reflected in
{¶ 28} We, therefore, hold that under the circumstances presently before us, the Miller Act does not apply and, therefore, that Grafton need not seek commission approval in order to force Ohio Edison to abandon the two electric service lines in question. Accordingly, for the reasons set forth above, the decision of the court of appeals is affirmed.
Judgment affirmed.
DOUGLAS and RESNICK, JJ., dissent.
PEGGY BRYANT, J., of the Tenth Appellate District, sitting for COOK, J.
DOUGLAS, J., dissenting.
{¶ 29} I am compelled to dissent because the decision of the majority and some of its language cause me great concern. I fear that the majority opinion starts this court and this state down a long and dangerous road with only disaster in sight. When that occurs, recovery will likely be expensive, time-consuming and too late for consumers who are damaged in the process.
I
{¶ 30} The majority makes at least three disturbing statements.
A.
{¶ 31} “Grafton argues that Ohio Edison‘s extension of service to Design and Rite Aid was wrongful and violated Grafton‘s exclusive right to provide utility service to its inhabitants. Grafton is correct.” (Emphasis added.) Thus, the majority says it agrees with Grafton that Grafton has the exclusive right as against all others to serve Grafton‘s inhabitants. “Exclusive” is defined as “[a]ppertaining to the subject alone, not including, admitting, or pertaining to any others. Sole. Shutting out; debarring from interference or participation; vested in one person alone.” (Emphasis added.) Black‘s Law Dictionary (6 Ed.Rev. 1990) 564. Accordingly, since Grafton has the “exclusive” right, the Miller Act never comes into play, and Ohio Edison can be ousted from Grafton without further pomp and circumstance.
{¶ 32} Can we be sure the majority really means this? Apparently so.
B.
{¶ 33} “Ohio Edison was an occupant at sufferance inside Grafton‘s municipal limits once the franchise contract expired.” An occupant is a person in possession. “Sufferance” is defined as “[t]oleration; negative permission by not forbidding; passive consent * * *.” Black‘s Law Dictionary (6 Ed.Rev. 1990) 1432. Thus, an occupant at sufferance is one who occupies by toleration, not being forbidden by and with the consent of another with superior rights. Accordingly, when Grafton decides to withdraw its consent, forbids, and ceases to tolerate Ohio Edison, then, without more, Ohio Edison is history in Grafton. This could be so notwithstanding the Miller Act.
C.
{¶ 35} This language of the majority in these three statements seems to be clear. But then we find other language.
D.
{¶ 36} “* * * Ohio Edison‘s right to continue serving customers that it served under its franchises is secure under the Miller Act * * *.” I agree, but how can Grafton‘s rights to serve its inhabitants be “exclusive,” Ohio Edison be an “occupant at sufferance,” Grafton have the right to “exclusive control of utility services” and Ohio Edison have any rights at all if Grafton, under our opinion, decides to summarily terminate Ohio Edison?
II
{¶ 37} The facts of this case are simple. Ohio Edison ran service lines to Design and Rite Aid from an existing Ohio Edison transmission line. The service lines are all within private property. The lines do not cross Grafton‘s public lands or rights-of-way. There is no franchise permitting the lines in question nor is there any Grafton ordinance or other law prohibiting the stringing of the lines.4 Grafton does operate a municipal utility service. Thus, the question becomes, does Ohio Edison have the right to run the lines in question and, if not, does Grafton have the right to have the service supplied summarily terminated or must Grafton involve the PUCO pursuant to the Miller Act?
III
{¶ 38} I believe Ohio Edison had the right to run the lines in question and establish service to Design and Rite Aid if those consumers chose to use Ohio Edison‘s service. While Grafton had not specifically permitted the lines to be run, neither has it prohibited such activity—even assuming, for purposes of argument, that Grafton does have such a right even on private property. But that really is not what this case is about to me.
IV
{¶ 40} Up front, I concede two points. First, pursuant to
{¶ 41} The interesting part of all of these cases is that an end result sought to be obtained by the PUCO is price reduction through competition. However, the road we are going down simply replaces one monopoly—an investor-owned utility6—with another monopoly owned and operated by government. This seems curious, given the order of the day which seems to be that those in charge of municipal governments want to privatize many municipal operations because the private sector can perform the service just as well or better than public employees and for less wages and fringe benefits.7 Today, when we flip the light switch, electricity flows. Tomorrow when it does not, and the responsibility is that of a municipal utility which, incidentally, is not regulated by the PUCO and will not be a payer of tax, who will we blame?
{¶ 42} Fortunately, at least for now, the law is that under the provisions of the Miller Act, a utility operating within a municipality may not be ousted from the
{¶ 43} We should not now or ever be part of confiscation of private property without compensation whether that confiscation be actual or constructive.
IV
{¶ 44} There is so much more that could be and should be written in this case, but time and space do not permit. I conclude for now with just saying I respectfully dissent.
RESNICK, J., concurs in the foregoing dissenting opinion.
Notes
So there can be no question about my avoiding the issue, I once again lay on the record that two of my sons are part of the investor-owned utilities’ 23,500 employees. I do not, however, own stock in these or any other businesses.