220 A.2d 772 | Conn. Super. Ct. | 1966
This is an appeal from the decision of the state tax commissioner holding the plaintiff The Hartford Steam Service Company, hereinafter referred to as Steam Service, or in the alternative the plaintiff The Hartford Gas Company, hereinafter referred to as Hartford Gas, subject to the tax imposed by §
Hartford Gas is a specially chartered public service company. At the 1961 session of the General Assembly, by amendment to its charter, it was "authorized and empowered, through the agency of one or more wholly owned subsidiary corporations, whether incorporated by special act of the general assembly or under the general statutes of the state of Connecticut, as well as by itself, to engage in the business of furnishing, from one or more plants, heat or air conditioning, or both, by means of steam, heated or chilled water or other medium." 30 Spec. Laws 94, § 2. Pursuant to this authority, Hartford Gas organized two wholly owned subsidiaries, The Hartford Steam Company, specially chartered, and Steam Service, organized under general law.
Steam Service is an unusual corporation. It owns no real or tangible personal property. It is supplied by Hartford Gas with both brain and brawn power. It has no employees of its own. Officers of Hartford Gas are also officers of Steam Service. Telephone calls are taken by employees of Hartford Gas. The personnel manager of Hartford Gas is also personnel manager of Steam Service. Tools and equipment utilized for Steam Service are owned by Hartford Gas. The building of which it is lessee and in which it conducts its business contains an exterior sign which reads "Hartford Gas Company Heating and Cooling Plant." Hartford Gas is the guarantor not only of the rent but also of the fulfilment of all covenants and conditions to be performed by Steam Service as lessee. Whatever else it may be, in economic reality Steam Service is the umbilical subsidiary of Hartford Gas.
In paragraph third of its certificate of incorporation, Steam Service was incorporated "to engage in the business of furnishing to the public from *279 one or more central plants, heat or air conditioning, or both, by means of steam, heated or chilled water, or other medium." Since it started in business in May, 1961, it has furnished steam heat and chilled water for cooling to a group of buildings in the central business district of Hartford. It has entered into thirty-year contracts whereby it has agreed to furnish and the purchasers have agreed to buy all of the purchasers' requirements for both heating and air conditioning. In 1962 Steam Service received $247,600, or 45.79 percent of its total gross earnings, from sale of steam, and $293,100, or 54.21 percent, for furnishing chilled water. In 1963 the corresponding figures are $436,100, or 41.24 percent, for steam, and $621,300, or 58.76 percent, for chilled water. Steam turbines are used in production of chilled water; the above figures do not reflect the use of steam for this purpose.
Section
The first ground of liability is based on an interpretation of the 1961 amendments to the charter of Hartford Gas. 30 Spec. Laws 93-94. As a specially chartered corporation, Hartford Gas is limited to such powers as are specifically granted in its charter or necessarily implied from granted powers. The specific grant of certain powers is an implied prohibition of other and distinct powers.New York Firemen Ins. Co. v. Ely,
The second ground for liability of Hartford Gas is based on the proposition that where the economic enterprise is one, the corporate forms being largely paper arrangements that do not reflect the business realities, the court should deal with the realities. National Labor Relations Board v. DeenaArtware, Inc.,
Although Hartford Steam Service Co. v. Sullivan,
Judgment may enter in favor of the defendant dismissing the appeal.