*1 al., Public etc. v. Service Commission of Indiana et Telephone Bell Indiana Co. 29,120. Rehearing Filed denied
[No. December January 10, 1956.] *6 Steers, Attorney General, Wright,
Edwin K. D. and J. Attorney General, Deputy appellants. for Perry Hyle O’Neal, Smith, E. Patrick J. Burke G. Thompson Smith, counsel, O’Neal & all of Indi- anapolis, appellee. for history litigation may C. J. A brief of this
Bobbitt, understanding assist present appeal. the issues in the appellee On petition November filed its appellant, Indiana, Public Service Commission of here- seeking referred Commission, inafter as an in- rates, charges crease tolls and for its intrastate *7 At hearings services. the conclusion of the on such petition, the May 31, entered an Commission order on authorizing appellee place to in effect increases $730,000 to annually exceed in intrastate ex- change telephone rates. 15, 1951, appellee
On complaint June filed its in the County Court seeking Circuit of Marion vacate, to set aside, enjoin and the enforcement of the order of the statutory1 grounds on the Commission that such order insufficient, unreasonable, unlawful, was and and was procured by means, asking unlawful and that such order 54-438, 1. Sections 54-429 to Replacement, Burns’ 1951 in- clusive. en- and the set aside and be vacated the Com- enj oined; and further that forcement thereof charging interfering the with enjoined mission from be according to schedules collecting by plaintiff rates and submitted, defendants until the [Commission] thereof non-eonfiseatory rates. reasonable, adequate and fix shall Court, hearing, on June the Circuit After enjoining injunction the enforce- temporary issued a restraining the Commission and such order ment of charging interfering collection the and from appellee until proposed in a schedule submitted rates court; providing “if that the the further or vacated should not be the of the Commission order enjoined upon the or enforcement thereof set aside any herein, appeal upon the determination trial or upon may judgment entered which be taken from trial, plaintiff make refund its sub- said shall as follows: . . .” scribers approved
Undertakings and sureties thereon were making of in the cause to assure the court filed any might required by refunds order. July 6, appellants petitioned this for
On court attacking prohibition juris and mandate writ of
diction of the Marion Circuit Court to issue the injunction. denied, temporary The writ was rel. in State ex Pub. Serv. Marion Ct. Com. v. C. 100 N. E. 2d this court held jurisdiction (p. 289) that the Marion had Circuit Court vacate, and determine actions hear set aside or any decision, ruling enjoin the enforcement of or order grounds of the Public Service Commission on the set further, and, in the out statute2 169, §1, p. 530, being §54-429, 2. Acts ch. Burns’ 1951
Repl. *8 power enjoin to an “The the enforcement of un- the lawful, insufficient or unreasonable order Public it Service Commission carries with the authority charging permitting to make an the order preserve of a schedule of rates sufficient to quo solvency utility of the or carrier in status and prevent pendente to property, the confiscation of its lite, by permitting utility during carrier, or time, charge such a schedule of rates which are confiscatory. respondents not complain, The order of which no It does more than this. does attempt rates, merely peti- permits to fix but (company) charge tioner rates a schedule of pendente lite, permit operate, it until which will questions a final determination raised of the its petition confiscation by day court, day in the trial a without dispel property such as will probability incurring irreparable injury an finally establishing in the event it is successful in higher schedule of rates.” Septem- Trial was commenced on Circuit Court Plaintiff-appellee requested ber special find- ings and conclusions and introduced evidence which the materially court found to be different from that offered hearing at the before the Commission.3 At the conclusion trial the Circuit trans- Court mitted materially to the Commission the different evi- provided by dence as statute.4 days Two after transmittal order was entered the May 31, Commission rescinded its filed motion to dismiss the action in the Circuit Court and to temporary restraining dissolve the order on the ground had upon rescinded the order which the court action was based. This motion was overruled and argument filing a time fixed for oral of briefs. p. §8, being §54-436, 3. Acts ch. Burns’ 1951 Repl. 54-436, supra. 4. Section *9 briefs, the filing of argument the and oral
After findings and con- opinion, special filed its written court Decree its entered January clusions, on Injunction. on Permanent by ap prosecuted to this court appeal was then
An (Public proceeding opinion in that pellants herein. Our (1953), 232 Tel. Ind. Bell Co. Comm. v. Service Marion 751) that the N. 2d held Ind. E. “approve power to the did not have Court Circuit injunction” and upon permanent rates a schedule of purported judgment insofar as the trial court the enjoin Commission permanently Service to the Public interfering charging the rates from with the approved by the court was of revenues as collection injunction provisions temporary of the reversed. The and the cause was remand were continued in force ed the trial court with instructions to return same to to “with instructions to consider the Commission proper rates.”5 new evidence and fix Bell Tel. also said in Public Comm. v. Ind. We Service Co., supra, (1953), p. 349, at 112 N. E. Ind. jurisdiction 2d “The Marion Circuit Court retains necessary temporary to enforce the in features its junction provisions completion.” until its have found July 17, Court transmitted
On 1953 the Circuit materially new different all of the court, together evidence the record heard including special finding said of fact and con cause opinion and the clusions law written of the Circuit Court. instructed, (1)
The Commission was “to consider the proper and, (2) upon evidence and fix new rates” enter- ing order, after consideration of the new evidence Public Service Comm v. Ind Bell Tel. Co. 332, 348, 112 Ind. E. 2d 751. N. Court,
and the from Circuit record received certify copy for thereof to the Marion Circuit Court provisions of the decree determination as whether the January 30, 1952, found of such court “have entered on completion.” order, including
This transmittal all matters which accompanied which, it, was refused the Commission upon delivery order, petitioned of such this court seek- ing a order directed clarification transmittal as supra. Co., in Public Comm. Ind. Service v. Bell Tel. Acting upon petition, this we held that the transmittal complied order of the Circuit Court with the mandate supra. in Public Co., Service Comm. v. Ind. Bell Tel. See: State ex rel. Public al. Commission et Service *10 Marion Court, 561, Circuit etc. 114 879, N. E. 2d 880. clarification,
After our denial of the Commission accepted order, including the transmittal all matters accompanied it, which days and (August two thereafter 6, 1953) granting entered an ap- order an increase in pellee’s annual original return over that allowed in its May 31, of 1951, order of $107,525, and certified the same to the Circuit Court. August 13, appellants
On herein filed their affi- change davit for a of judge. venue from the This was judgment6 denied and entered in accordance with the Omitting parts, including findings, judgment formal present appeal of the Circuit Court from which the taken, is is as follows: Ordered, Adjudged “It Is Therefore and Decreed that the said changed Order of the said Public Service Commission of Indi- ana, August 6, 1963, dated null is void is vacated and set aside. Adjudged Ordered, “It Is Further provi- and Decreed that the court, January 30, 1952, sions decree of this entered Supreme opinion Court of Indiana said is the decree opinion in effect in now accordance with its rendered on June 530, being 169, p. provisions ch. §9, of Acts §54- Replacement. Burns’ overruling appel- present appeal followed lants’ for a new trial. motion questions, of their presented, and are because
Several importance we believe consider all those which we will though necessary in their is not material even decision determining appeal. this immediately pro
First: confronted with the areWe question cedural of whether the trial court erred change denying appellants’ application for a judge. from the venue selecting special governed judge The manner of court, Rule of this 1954 edition. Such rule 1-12 provides: application change judge pro- “An for as now days vided the date set for the be filed at ten law shall least before trial, or if a date than ten less days trial, applica- in the future is set for the setting days
tion shall filed within two after trial.” of the case for September The trial of this case was commenced on September and concluded on 1951. The opinion, special finding facts, court’s written injunction conclusions of law and its decree of were January 30, appeal filed on 1952. On from decree this directing a mandate was issued the Circuit Court to *11 5, 1953, completion by changed not have found the Order of the August 6, Public Service Commission of Indiana dated Ordered, Adjudged “It Is Further and Decreed that the said Public Service Commission of Indiana and its members agents hereby enjoined enforcing are and each is from or at- tempting any provisions changed to enforce of the terms or of its Order, August 6, dated 1953.” (1953), 7. See: Public Service Comm. v. Indiana Bell Tel. Co. supra. instructions with matter to the Commission return the rates; and proper fix new evidence to consider the retain Marion Court providing that the Circuit further injunction. provisions of jurisdiction enforce the decision, by nor did this ordered No new trial was Hence, opinion. court’s any of this accrue reason 85, being Burns’ 1946 p. 1907, 59, §2-1404, ch. §1, Acts rea- the same applicable here. For Replacement, is not App. Compton Benham v. son sup- appellants upon by lends no 365, and relied N. E. position. port to their required or not whether to determine
No trial was changed complied with of the Commission order entered the Marion Circuit of transmittal order filing by July did the the Com- 1953. Nor Court on changed No. with of its order in Cause mission August present on the Marion Circuit Court filing changed trial. The of this of action for a new cause compliance merely incident with the an- order was Ind. Public v. Service Comm. mandate of this court Bing- supra. Keating ex rel. Co., State Bell Tel. Cf: Judge (1954), Ind. E. 2d 727. ham, N. filing changed order act in was The Commission’s court and did performed of an order of in fulfillment meaning trial, require term as within not court, of this to determine whether in Rule 1-12 used complied the order of not the had or court. change of
Appellant’s motion for a venue was properly timely filed, Rule 1-12 hence was overruled. Supreme Indiana. Court of presents record on question this Second: comply with the Did the Commission the merits is: by order of the transmitted this court as mandate Court, mate- “to consider new [and Circuit Marion
15 for rates” proper and fix rially evidence different] as that question the same is This appellee herein? when confronted Court was Marion
which the Circuit it on changed certified order was the Commission’s August 6, 1953. fair and non- produce a
Proper rates are those
the com
enable
confiscatory return, and such as will
management,
to maintain
pany,
efficient
under
public,
the
and
utility
property and service
its
upon the fair value
provide
return
a reasonable
property.
Serv. Comm.
Public
used
useful
its
v.
656,
2d
Indianapolis Rys.
(1948), 225 Ind.
76 N. E.
841;
Gas, etc. Co.
Public Service Comm.
v.
Columbus
538;
Indi
(1923),
399,
Ind.
140
E.
McCardle 193
N.
Ed.
anapolis
L.
U. S.
Water Co.
316,
Appellants’ questions. into two
(1) That is the the Commission suffi- upon and the the cient its face court is without power to it. disturb appellee
(2) That the has failed sustain establishing that burden such order was unrea- confiscatory. sonable and
(1) question consider We shall first the of the bur- proof. den of Commission-appellant
The order made the on August 6, 1953, response inwas to the instruc- court’s the tion and Circuit Court could determine from the findings the Commission whether rates fixed proper comply July are therein with its order of transmittal. This has done. court general true, rule, appellants as While as as sert, that rates fixed presumed are being lawful, p'.
to be ch. §77, Acts Replacement, Burns’ 1951 bur §54-428, complainant upon den is to show determination and order unrea of the Commission was unlawful, Public sonable or N. Y. & L. R. R. Co. v. C. St. *13 573, (1936), 466, Service 209 Ind. 199 N. E. Comm. however, applicable rule not this here because of August 6, circumstances under which the order of 1953 was made.
(2) Appellants general correctly assert that as a may weigh rule the trial court the evidence and substitute its discretion for that of the Commis City sion. Public Service Comm. v. LaPorte (1935), 462, 668; 207 Ind. 193 N. E. Warren Telephone (1940), 93, Indiana Ind. Co. 217 26 N. E. v. general 2d 399. Neither can the court aas rule disturb findings of the Commission where it has conformed statutory procedural methods where its supported by decision is substantial evidence. However, exception general an to this rule occurs where, here, being questioned as the order is as confisca tory. Ind’p’ls Pub. Railways Ser. Com. v. (1947), 225 30, 434; Ind. 72 E. 2d Valley N. Ohio Water Co. Ben v. Borough (1920), 287, Avon 253 U. 908, S. L. Ed. 64 527; Joseph 40 S. Ct. St. Stock Yards Co. v. United (1936), 38, States 298 1033, U. S. 80 L. Ed. 56 S. Ct. 720:
Hence, where a rate established the Commission confiscatory, may, upon is attacked as the court its own independent judgment, review that issue as to facts, both law and to the end that constitutional rights may protected. be Public Service Commis (1953), 332, sion Ind. Bell Tel. 347, v. Co. 112 751, supra; E. 2d Public N. Indianapolis Serv. Comm. v.
17 841, supra; 656, N. E. 2d Rys. (1948), 225 76 Ind. v. (1947), Corporation Maltbie Edison Island Staten 825; 707, 2d 705, 8 R. 374, 2d A. L. N. E. 296 N. Y. 679, 106 (1952), Mass. Opinion the Justices cited; Joseph Stock there St. E. and cases 2d N. Yards Co. v. 298 U. S. United States Valley Water Ohio Ed. 56 S. Ct. supra; L. U. S. Co. v. Borough (1920), 253 Ben Avon 527, supra. 908, 40 L. Ed. S. Ct. supra, Indianapolis Rys., Public
In Serv. Comm. proceeding one it a similar had before this court Ind., bar, page it 661 of 225 said: at and at enjoined from interfer- “The commission was ing emergency rates until it fixed rates "with confiscatory. If the not unreasonable or were granting relief, prohibited from such court were property could taken mean that without would no re- just compensation, and that there would be fixing the commission rates lief from an order of *14 enjoin Equity enforcement. has excepting to its right helpless. had that The court the been never to examine by fixed the and the rates commission they or not unreason- whether were to determine confiscatory. that if the It is evident and able confiscatory, to it then did find such rates be court rates, higher a schedule of the could examine the commission. If the had filed with been any than the that rates lower rates believed court requested would be unreasonable and refused thus power protect confiscatory, to the it had the and appellee results property the from such dire of setting any enjoining of rates lower than by those the requested and refused.” powers correct is a statement this believe We circumstances. under such the court of power had the to declare rates Court If the Circuit by May in the Commission its order of 1951 fixed 18 confiscatory, follow that it must
unlawful before right evidence consider the to had the and ma Commission, together the new the trial which at terially evidence submitted different purpose September 1951 for the on was concluded do determining question. It so could that Frazee v. any Public Service Commission other manner. 328; City Al E. New (1919), Ind. 122 N. 188 Ind. bany v. Public Service Comm. N. E. 433. found the Court schedule of rates
When Circuit August 6, 1953 order fixed the Commission produce than that would a return less which the had, proper consideration, found to court after necessary confiscation, be to avoid it had the duty prevent power, in the exercise of its the unlaw taking enjoin property, permanently ful the set ting enforcement of such rates. Public Service Indianapolis Rys. (1948), Comm. 841, supra; E. Jur., N. 2d See also: Am. Public Services, p.
Utilities §185, Court, by In at the Circuit the case bar its decree 1952, prohibiting January 30, the Commission from interfering collection with the of the schedule of rates by appellee, must be deemed submitted to have deter- provided schedule mined such minimum rates necessary to avoid confiscation. Since the rates fixed changed August 6, in its the Commission than were lower those submitted and found to necessary confiscation, the minimum to avoid power enjoin permanently had court their en- forcement.
While, as we in Public said Service Ind. Comm. v. Co., supra (1953), 332, at p. 346, Bell Tel. power “the not have a court does E. 2d N. permanent upon approve of rates a schedule to power however, does, have injunction,”; of a enforcement enjoin permanently the duty to confiscatory. to be it has found of rates schedule italic.)’ (Our being p. 530, Burns’ §54-429, ch. §1,
Acts Eeplacement. Constitution, Eights Indiana Both, of the the Bill of Federal to the 14th Amendment and the Article §12, alleges guarantee who to an owner Constitution property will result a confiscation his that Commission, a fair a rate order of from submitting court for that issue to a opportunity for independent judgment upon to both own as review 54-438, facts, Burns’ 1951 to law and §§54-429 inclusive, this action Eeplacement, under which is right. remedy adequate brought, to enforce afford power this actions such as now courts may do be summarized as follows: Courts before us change power have the to revise or a sched imposed by Public ule of rates Service Com ; they do not whether rate mission determine one another, they perform preferable nor do is mere However, they possess power duties. do ministerial inquire duty and have the whether a schedule of prescribed unlawful, the Commission in rates or unreasonable and such as result in a con sufficient property, and, found, if fiscation of so to restrain its enforcement. power grant had the
The Marion Circuit Court appellee despite appellants herein the fact that relief to May 31, 1951, their order of rescinded and after recited, proceedings had as above had also en changed August tered its 1953. Colum *16 (1923), Gas, bus etc. Public Service Comm. Co. v. 399, 538, supra. Ind. 140 N. E.
Appellee (1) asserts rates fixed in the schedule of changed August order of the Commission on issued 6, 1953, confiscatory; findings upon (2) is of facts which such order founded are is not based on evidence Commission; (3) findings before such are inade- quate; (4) the action of the in deter- mining by the schedule of of rates fixed its order August 6, 1953, arbitrary. was special finding of facts and conclusions of law by January 1952, filed 25, Circuit on Court and its opinion part
written are a of the record in the appeal they present approved by since were the action of this court in Public Service Comm. Ind. Bell Tel. (1953), 332, Co. 232 Ind. 112 N. E. 2d 751, supra, they part are case; now a of the law of the (1951), Todd v. State 229 Ind. 101 N. E. 2d 45; Soderling (1950), v. Standard Oil Co. 229 Ind. 298; E. 2d 95 N. New York Co. v. Kuhlen Ins. Life schmidt 33 N. E. 2d 397; A. L. R. accept and we such facts as found. (1) In May 31, its order of 1951, the Commission appellee’s found the fair value of property, used and useful in business, intrastate $90,500,000, just and the rate of return on such value to be 6%, upon averages based for the calendar year providing gross thus a annual income applicable $5,430,000. to return of It further found by applying the rate of return on a rate base 6% $90,500,000 there would deficiency be a $380,000 appellee’s earnings, by and that reason thereof permitted should be to increase its subscriber rates in gross exceeding amount $730,000 annually. changed August 6, 1958, the Com- In its order appellee’s intrastate fair value of mission found the averages 1950, and property, upon the for also based using separation, to be Method” of “Charleston $94,792,091, upon that a fair return this value by applying a $5,587,525.® produced This return was found the Com- rate of to the fair value as 5.84% mission. September,
The Marion at the trial Circuit Court 9, together evidence,8 after consideration of new *17 with that the Commission found: received from gross
(1) Appellee’s intrastate revenue as annual 31, 1950, $41,032,355; of December expenses operating (2) as of The annual intrastate $35,037,026; to be December (3) , adjustments in find- Due to certain considered changes ing wages, in taxes and number because of items, expenses other the annual intrastate would be by $1,196,834; experience over actual increased Wage January 1, 1951, (4) have increases since $2,176,294 appellee’s approximately annual added wage which, expense, taxes, after deduction for federal expense $1,044,621; a net additional intrastate of leaves finding giving (5) number 16 detailed items Court’s is as follows: Changes during “16. occurred in some expense; of
items intrastate others became certainly during prospect year. in Still others since occurred and are and will remain effec- have $94,792,091 is, according figures, $5,535,- on to our 5.84% $5,537,525. figure However, not latter is used appears transcript one because it is the in and briefs. right 9. For of court to consider the new evidence see: (1919), Public Service Commission Frazee 188 Ind. 328; City Albany E.N. New v. Public Service Comm. 416, 140 N. E. 433. in- which, strictly, not adjustments do tive. Two volve required. is changes experience It are expenses necessary adjust plaintiff’s actual 1950 changes properly to determine for all plaintiff’s in order such going expense. rate of intrastate pri- “(a) casualty expense results Plaintiff’s marily year, damage. year to It from from varies storm average except by period, coinci- so the of a dence, experience of a more reliable than the is casualty single average year. intrastate Its annual years expense $34,987 1950 was for the five ended with alone, plaintiff’s intra- less than for 1950 so $34,987. expense credited state should be “(b) normally expense Rate case does occur every year proper and it to amortize such ex- engaged pense period years. over a Plaintiff has years and the in three rate cases in less than four undisputed pense ex- evidence that the end of such prospect. shows immediately Therefore it is is not plaintiff properly found that amortized rate three-year expense case on a basis and increased expense its- actual 1950 of that kind $419. “(c) wage May 14, 1950, As rates plaintiff’s employees in- were increased. If said throughout year, crease had been in effect entire wage plaintiff’s expense additional annual intrastate $88,562. would have been “(d) finding 13, above, plain- As mentioned in September tiff’s intrastate increased rates were on 5, 1950. Such additional revenue would have en- *18 expense gross tailed additional for Indiana income expense by $40,675. taxes and for license contract “(e) change security A in Federal social laws January effective would have increased so- security by $14,490. cial taxes “ (f) During plaintiff accrued at funds payroll payment rate of of for the of future 6.76% pensions employees. plaintiff to its For 1951 actu- arially determined the rate to For 6.65%. reason and due to a reduction in the assumed rate earning pension plaintiff of on its fund credited expense $23,860. “(g) adjustments The net effect all of to reve- expense nue and hereinbefore found was a in- net expense adjustments over in revenue crease en- $1,722,464, would have adjustments of income, 47%, at on Federal taxes tailed additional $809,558. of “ plaintiff’s During of (h) Federal taxation Be- for at rate of income was accounted fore the 42%. year increased the rate had been end of the of Proper adjustment account taxes on to 47%. plain- increased would increase in rates have the tiff’s by $301,977. taxes adjustments far in this “(i) considered so finding annual intrastate have increased 16 would by $1,196,834, experience actual expense over 1950 average telephone per in or at service rate of $2.11 584,340 during 1950. On the basis 31, 1950, the in- telephones in on December service expense would have in intrastate annual crease adjusted intra- $1,232,957; partially annual been $36,269,983; and expense have been would state partially earning's adjusted going annual intrastate rate of $4,762,372.” been would have Making adjustments necessary because (6) further wages increase in federal in Item above 52%, taking into account from taxes 47% January 1, depreciation rates since reduction “going intra- appellee’s and reasonable rate of annual expense $37,703,935 operating and taxes” is as state 1951; September, going Deducting
(7) of annual intrastate rate going expenses rate from the of annual intrastate reve- gross earnings nues, applicable annual intrastate $3,328,420; to return are Upon
(8) appel- all the evidence the fair value of providing property, and useful intrastate used lee’s service, $110,000,000. is not than less $3,328,420
(9) A return of on a valuation of $110,000,000 provides a rate of return of not than more $3.03%.
(10) unreasonably That a rate return is of 3.03% low, confiscatory; insufficient and
(11) The court further found that a return of 6% $110,000,000 on a valuation of was the minimum neces- sary provide appellee with a reasonable non-confisca- tory return on property. its used and useful intrastate having
The $6,660,000 Circuit Court found that was earnings necessary the minimum annual net under all appellee’s property, evidence to avoid confiscation of reasonably it 'could have that an found annual net $5,537,525, return of produce $1,062,475 which would per year, earnings, net confiscatory. less would be foregoing
From the it is our conclusion that there is support substantial evidence finding the trial court’s that the August schedule of rates fixed 6, 1953, in the order of the confiscatory. Commission is
(2) (3) findings Are the sup- the Commission ported by record, they evidence in the adequate and are ? law well settled in Indiana that “if there is support substantial evidence to findings, and if the determination or order is one which the Com- power make, mission has the in view of the findings, uphold it;” courts must N. Y. C. & Singleton St. L. R. R. Co. v. (1935), 207 Ind. 761; and, further,
190 N. E. in Public Service Commission City LaPorte, supra v at . p. 466, 193 N. E. this court said: “. . . trial court is not concerned with the question of whether the rates or other orders of exactly
the commission are those indicated evidence taken commission, before the nor with the question they of whether are the rates and orders which the court would have made under the evi- dence taken commission, before the if the court sitting were whether as an commission, administrative nor they are the rates and orders that court would have made under all the evidence. The rate-making not con- power, and is has no court rate-making action ministerial or other cerned *20 with- commission of the the orders except in reasonable confine to
bounds.” that “an equally well settled is law by upon found facts founded must the Commission upon evi substantial based Commission the Ry. Wayne Ft. U. v. Pub. Serv. Comm. dence.” 719; Kos 82, E. 2d 111 N. 232 Ind. Co. (1948), 225 Comm. County, Public Service etc. v. ciusko 572, there cited. 672, 2d and cases N. E. Ind. per Finding 3 of the Commission number method, taining separation follows: is as original this order was entered the “Since and of Railroad Association cause the National together Committee, Utilities Commissioners’ the Bell known as agreed upon System, what is now has Separation,’ the Method of ‘Charleston only slightly appears produce a result which different by produced the method set from that Method previously ‘Honaker and described as- forth opinion 1.’ is now of the No. This Commission Method’ is the best that the new ‘Charleston gives yet equit- promulgated, and a more has been petitioner public, and to the and to the able result has, therefore, for the been used expenses separation properties the and of the the Telephone Company between its Indiana Bell interstate as operations in this order.” and intrastate concerning in the record There is no evidence Method”, nor are we able from a careful “Charleston finding, entire to determine what consideration is; method what is its formula of classification of such property; properties to what interstate and intrastate sys- applied, expenses it or how and was what appellee’s the fair of allocation or division value tem property $94,792,091. was determined to be intrastate by evidence, only unsupported is finding but This improper clearly inadequate in that neither can ascertain from nor this court Marion Circuit Court finding appellee’s fair value of intrastate such how the Ft. property Public was determined. Serv. Comm. Wayne Ry. Co., supra (1953), U. E. 2d
N. finding support find no evidence to as We surplus capital T. T. for of A. & amount years 1945 and which are set out in the finding No. 4. Commission’s Finding number further recites that there was no during expansion years 31, 1945, time December
to December that the A. T. T. & could capital. statement, not raise additional This even *21 upon evidence, if based substantial which we record, have unable to find in the been does not establish herein, appellee as a fact that which is an Indiana cor having separate poration identity though its own even general part System, of the Bell would be able to raise additional revenue on a rate of return as fixed August 6, 1953, in the order of the Commission. might We find no substantial prop- which evidence be erly considered to establish that a rate income of $94,792,091 on a fair value of is sufficient to 5.84% capital appellee. attract new No evidence was introduced either before the court September or before the 20, Commission after Under this state of the record it is evident that the findings Commission, appellee’s that “capital aggregated $95,825,000 which at 1951, the end of was supplied all A. T. & T. with exception the of 12 having of common aggregate shares stock par an value $1,200 . . earnings and that “the of the Bell System applicable to A. T. & T. exceeded dividend $9
27 1951, during years 1950 the two on that stock” upon appellants’ and not upon information were based appears in the record. evidence at the Commis the action bar In a matter such as information, independent on its own sion cannot act findings upon pre evidence must base but case, opportunity an to cross- sented in the witnesses, inspect ex documents or examine explanation or hibits, evidence in rebuttal and to offer nothing as evidence which has not can be treated v. Ft. as such. Public Serv. Comm. been introduced Ry. supra Wayne Co., (1953), 232 111 N. Ind. U. Ry. Co. v. Atchison, 719; T. & S. F. Commerce E. 2d 837; (1929), Ill. 167 E. N. Commission Co. v. Teleph. Public Utilities Comm. Bell. Ohio L. Ed. Ct. 724. S. S.U. only be must The specially upon found founded facts Com upon mission, facts sub such must based but Public Serv. Comm. v. Ft. evidence. stantial supra. Ry. Co., Wayne U. findings sufficiently specific to must be intelligently court the Com
enable the to review decisions. Public Serv. Comm. Ft. mission’s Ry. Co., supra. Wayne U. finding that, part 3 which
That
number
states
opinion
new
is now
“This Commission
yet
Method is
best that
been
has
Charleston
gives
equitable
a more
promulgated, and
result
*22
[appellee]
petitioner
public,
the
and to the
to
therefore,
by
has,
the
used
for
it
been
and
properties
expenses
the
and
separation of
Telephone Company as
Bell
between its inter
Indiana
order,”
operations
(August
in this
state and intrastate
6, 1953),
It
is a conclusion drawn
Commission.
finding
upon
is
a
an
be
not
of fact
which
order could
Comm.,
County,
based. Kosciusko
etc. v. Public Service
supra (1948),
From the we the order must conclude that August 6, the Commission issued not on is findings upon appropriate based and does therefore, upon is, rest substantial evidence. It may enjoined unlawful and its enforcement for this further reason.
(4) changed arbitrary Is the Commission’s order and hence unlawful? apparent
It is a from consideration of the evidence findings changed and all August 6, 1953, that the Commission considered the amount necessary appellee to enable to- contribute its share required by parent the over-all company, return T., A. T. & and fixed its annual accordingly. return Appellee upon entitled to is a fair return intra- its actually property state and used useful for the con- public, regard venience of the without to the amount by way of contribution stock, of dividends on its charges pays other reasonable it annually to the parent company, A. T. &.T.
Appellee corporation, an separate is Indiana utility distinct duty as defined statute10 and is of the Commission to establish for it a schedule produce of rates which will a fair and non-con fiscatory upon return its used and useful intra property, state whether its stockholders are or one regard many, relationship without to other companies. appellee fact has not used its own credit capital
with which raise immaterial, additional 318, §1, p. 1267, being §54-105, Acts ch. Burns’ 1951 Replacement. *23 yard- by ability do cannot be measured to so and its company addi- ability parent to raise of stick of the operations properties and capital. The intrastate tional fixing considered in a appellee ones to be are the of property upon its and useful of return used fair rate System. of the entire Bell and those considering appellants in the cost of The of acts T., money parent company, A. T. & to considering only System” rather than “entire Bell operations appellee is of in violation properties and being p. 1251, Burns’ §54-203, ch. §1, Acts Replacement, and is unlawful. original in order found: The its Commission opinion, it was is of the as “The Commission September approved on it drafted its order when Petitioner would in Cause No. saving a cor a tax have realized substantial earnings a responding capital if it had in had increase one-third debt and structure of two-thirds reason equity, finds be a which ably capital structure. sound therefore, Commission, Peti- finds that “The earnings adjusted accordingly tioner’s should assuming capital structure.”; equity debt a one-third and two-thirds finding the sum of accordance with this $334,935 federal taxes was disallowed. Commis earnings computed appellee’s for after
sion taxes, deduction for federal income interest and dividends, $4,718,129, they at to which amount saving $334,935, theoretical tax and found added the earnings $5,053,064. appellee’s This to be had the effect depriving appellee of that amount of income which Appellants arbitrarily it was entitled. could not dis appellee paid, had or allow federal taxes was obligated by assuming saving pay, cap a tax under action was both
ital did not exist. This structure which arbitrary and unlawful. July 17,
Third: of transmittal Did the order August completion” “find the Commission’s 6, 1953? negative question
This must be answered in the for *24 following reasons: (1) by appellee The rate of return allowed such by order is less than that determined the trial court necessary provide to be the minimum to a reasonable non-confiscatory return; (2) The Commission found the fair annual return appellee $5,537,525. 31, May to to be In its order of 1951, which the Marion first found to Circuit Court confiscatory, unreasonable and the Commission found appellee $5,430,000. the fair annual return to to be changed August 6, effect then of its 1953, was by to increase the net annual return the sum of $107,525.
Among materially the new and different evi dence introduced at the trial and transmitted the Commission for its consideration were the following items:
1. A net in wage increase the total annual intrastate expense which occurred reason of in increases sal- wages aries and in 1951 $1,044,621. in the amount of 2. An increase in federal income taxes due to an increase 52%, making in rate of from a net 47% expense additional $449,280. annual intrastate of A depreciation 3. net reduction in intrastate ex- pense $59,949. of properly
This evidence was all admitted and consid- ered Frazee, the court. Public Service Commission v. supra 573, 188 Ind. 328; City 122 N. E. supra (1923), Comm., Albany Public Service New E. 140 N. finding nothing in the Commission There is changed that show upon order based which the any gave to the items whatever it consideration above mentioned. new evidence only changed granted increase of order an
Since original May on $107,525 order entered their over clearly apparent the Commis from it is findings completely ignored an sion’s appellee’s intra actual annual increase net $1,433,952 expense which had occurred since state hearing January 8, 1951, and commenced on May 4, part of the new and was a concluded on produced materially at the trial different evidence the Marion Court. Circuit was, opinion, in our This action arbitrary wholly failed to consider and unlawful comply July order transmittal or to Court. of the Marion Circuit *25 creating purpose the statute the Public
The of Serv- defining powers duties, and and is ice Commission regulation public supervision utilities within the designed supply missing It to the element the state. is protects public competition the from excessive duty charges competitive businesses. It is the of the charged that the rates are fair and to see Commission reasonable, utility. the to consumers and the both regulate
However, power power not the to the to is destroy, and the limitation which the Public Service impose public may upon utilities the charges fixing equivalent not is the rates Commission, acting The Public Service confiscation. delegated scope powers, the of its cannot re- within telephone appellee to furnish quire public service the just compensation, without and reasonable can it nor piecemeal enforce an order which results in a confisca- private property public tion of for use. comply July failed Commission has with the
17, 1953, Court, the Marion Circuit and for judgment this and other reasons above set out the of the August trial court dated and from which this appeal prosecuted, things should be in all affirmed.
Judgment affirmed. Landis, JJ.,
Achor and concur. Emmert, J., opinion. concurs with Arterburn, J., participating.
CONCURRING OPINION
agreeing
judgment
J.
In
that
Emmert,
affirmed,
trial court should be
I would not be understood
believing
jurisdiction
as
that the trial court had
to enter
temporary injunction
it
did on June
1951. State
ex rel. Pub. Serv. Comm. v. Marion
(1951),
C. Ct.
888, dissenting
Ind.
E. 2d
opinion
N.
230 Ind.
277, 103
E. 2d 214.
court,
N.
Later
speaking
this
Judge Flanagan in Public Service Comm. v. Ind. Bell.
Tel.
Co.
N. E. 2d
clearly
held
the trial court
utility
could not fix
rates.
opinion,
quoting
The same
after
Article III of our Con-
stitution,1 stated,
exception
“No
is involved in this case.”
power
If the trial court
no
had
fix
perma-
rates on a
injunction,
logically,
nent
follows it
jurisdic-
had no
powers
1. “The
of the Government are divided into three
separate departments;
Legislative,
including
Executive
Administrative,
Judicial;
person,
charged
and no
departments,
with official duties under one of these
shall exercise
any
another, except
of the functions of
as in this Constitution
*26
provided.”
expressly
III,
Article
Constitution of Indiana.
However,
injunction.
temporary
to fix
on a
tion
rates
injunction be
temporary
majority
on the
decision
binding
case,
on this
and is the law of the
came
involving
appeals
this contro
subsequent
all
court
in
Verbarg
Park Bd. versy.
ex rel. Joint Co.
State
tempo
The
case when and other controversy reex may this court. A come before ticular then be in constitutional issues will of the amination order. present appeal consideration the
In now under judicial independently inquiry its own trial court made property in fair of the used useful into the value business, would be a reasonable Bell’s intrastate what valuation, just return on such a and its rate of operating appears expenses. This reasonable intrastate special finding of and con- from the trial court’s facts liberty is not at clusions law. Commission disregard finding special the court’s facts or overrule of law. the matter and conclusions When was returned compliance our mandate of Commission duty it was the to fix June done, judgment proper rates. Since this was the trial court should be affirmed. Reported N. E. 2d 467.
Note. —