Southern Nebraska Power Co. v. Taylor

Day, J. The Southern Nebraska" Power Comp'any, a public utility corporation, made application to the state railway commission for authority to issue additional stock of the corporation based upon the value of its property. In addition to its physical property the company listed a waterpower right, upon which it' asked permission to issue stock. At the conclusion of the hearing-the railway commission made, findings as to the value of the physical property, and also found the, v.alue of the. water-power right to be $50,000. Upon these findings the railway commission issued an order granting the- corporation authority to issue additional stock. From the order of the railway commission the corporation has appealed. No objection is made by appellant to the action of the commission in fixing the value of the physical property. It contends, howéver, that the value of the water-power right as found by the commission is entirely too low, and urges that under the evidence the water-power right — 685 — should have been fixed at not less than $100,000, The attorney general in behalf of the state, appearing in the case for the first time, has filed a brief in which, he contends: First, that appellant’s water-power right is a franchise, and that under the provisions of section 676, Comp. St, 1922, the railway commission is prohibited from authorizing, the issuance of any stock by a public utility corporation, based on the value of its franchise, and that therefore the .railway commission erred in. permitting the corporation to issue stock to the amount .of $50,000 based on the value of the water-po;wer right; and, second, that, should the . court hold-that the. water-power right was not ,a franchise, then under the record the railway commission’s finding as to the value.of the,.water-power right is correct and amply .sustained by the evidence. Section 676, Comp. St. 1922, provides, in substance, that public utility corporations organized .under , the law of this state may not issue stock of the corporation without first obtaining authority . of • the state .railway, commission. The section further provides; “The commission shall have no .power to .authorize the capitalization of any franchise to be a corporation, or to authorize the capitalization of any franchise, or the .right- to own, operate, or enjoy any franchise whatsoever, in excess, of the amount (exclusive, of any tax.or annual charge) actually paid to the state or,to a political subdivision thereof as the consideration for the grant of such.franchise or right.” It appears that in,1878, and long before the state undertook to regulate or control the use of the waters in the streams of the state, Robert Guthrie conceived the idea of operating a grist-mill by means of water-power obtained from water in the Republican river. A little south and. west of the .city of Superior the Republican , river, flowing from the west, makes a sharp turn to the south, and,, returning north, forms what might be termed an “ox-bow.” The distance across the bow is about three miles. In consideration of Guthrie’s erecting the mill, a — 686 — number of property owners donated to him a right of way 100 feet wide for the mill-race. The right of way thus acquired,, together with a few purchases, and the use of the bed of a dry creek, to which no objection was made, gave him a strip of land 100 feet wide, extending from the intake of the mill-race to where the tail-race returned the water to the river. Guthrie built a, diversion dam in the river, constructed his mill-race and tail-race, erected a mill, and operated it for a number of years. At a later period the rights of Guthrie were acquired by Guthrie Brothers, a corporation, and in 1915 appellant was incorporated and succeeded to the rights of Guthrie Brothers. Still later the appellant acquired by purchase an electric light plant, having a franchise from the city of Superior, and also built a transmission line to a neighboring city. The power used to operate these plants was largely obtained from water taken from the river. During all the years since its first construction, the water-power from the river has been used, except occasionally when some parts of the equipment were undergoing repair. In recent years the principal use of the water-power has been to generate electrical power for the operation of public utilities. The appellant having succeeded to the water-power rights of Guthrie, the question is presented whether his water-power rights, in any proper sense, can be said to rest upon a franchise. Generally speaking, a franchise is a grant of a special privilege by public authority, the main element of which is the permission to do something which otherwise the grantee would not have the right to do: Under the facts presented by this record, it does not occur to us that the water-power right acquired by Guthrie was a “franchise” as that word is usually understood. By virtue of the fact of his .ownership of the right of. way connecting with the river, he. was a riparian owner, and, as such, had the right to — 687 — divert the water for power purposes. This right was not bestowed upon him as a'special privilege by the state or any of its municipal subdivisions, but was a common-law right applicable to every riparian owner alike. The only persons who had a right to complain of Guthrie’s use of the water were other riparian owners whose rights were thereby infringed upon. Such was the law of the state before the enactments declaring the water in the streams of the state to be dedicated to the use of the people. In Kearney Water & Electric Powers Co. v. Alfalja Irrigation District, 97 Neb. 139, the history of our legislation upon the subject of water-rights is reviewed at considerable length, and it was held that, prior to the enactment of the irrigation statute (Laws 1889, ch. 68), our law provided no method of making a claim of appropriation of water except the construction of works to divert it, and applying the water so diverted to a beneficial use. It was also held that there was no distinction between the use of water for irrigation or for power purposes, and that appropriations which were completed under the act of 1877 (Laws 1877, p. 168) became vested rights' and could not be taken for any purpose without just compensation. It may not be amiss to say here that the law of 1877 simply gave to corporations operating canals for irrigation purposes the right to acquire a right of way by condemnation. In Clark v. Cambridge & Arapahoe Irrigation & Improvement Co., 45 Neb. 798, it was held that the common-law doctrine with respect to the rights oi riparian owners prevails in this state, except as it may be modified by statute. It was also held that the right of a riparian owner, as such, is a property right, and, when vested, cannot be takén away or impaired without compensation. In Crawford Co. v. Hathaway, 67 Neb. 325, it was held that the common-law rule with respect to the rights of private riparian proprietors has been a — 688 — part of rbe law of this state ever' since the-organization of - the state government. ■ ...................■ Whatever may be said-of- a water-power right acquired since the- time the legislature declared the use of water in the streams-of the-state to be -dedicated to -the people as being a franchise; a question which seems unnecessary to. determine, we are-quite clear- that, -'under the-facts of this record, the water-power right- cannot be considered a franchise. Appellant’s water-power right-is a valuable property right, and it was proper for the railway commission to authorize the -corporation to, issue' stock based upon its valué: Upon the quesPon of-the value of the water-power-right there was a wide diversity • of opinion ■ among the expert witnesses who testified iipon that subject. One of them placed the value- at-something over $200;000: - The testimony of the experts was highly technical, and based upon theories which- resulted- in a 'saving by the use of waterpower over the use of -internal combustión engines. One of the experts, whose valuation was the lowest, advanced certain theories upon- which his calculation • was based, and -which' resulted-' iñ a valuation of $85,000; but, he furthertestified:- “Realizing that my'costs were estimated and more or less theoretical, I" concluded by saying that I believed "a normal value Of' the water-right to be $50;000. I say- this because I realize that something might happen to the -water-plant. The dam might wash -out again .as it has just done; á great many things might happen which would cause this company to generate its power on‘ the oil basis; and, in view of all those contingencies throughout the years, I have considered the $50,000 more reasonable and conservative than the $85,-•000.» ■ From an examination of the expert -testimony, we are unable to ■ say it affirmatively appears • that the finding .and- order of the railway commission were clearly wrong. The rule is now well established that, in direct ap — 689 — peals to this' ■ court front orders of the state railway commission, ■ such orders1 will not be -reversed-• unless it affirmatively- appears from the record - that they- are clearly wrong.1 Byington v. Chicago, R. I. & P. R. Co., 96 Neb. 584. To sum up, we conclude that the water-power right of appellant does not rest upon a franchise; that it was proper for the railway commission to -authorize -appellant to issue stock of the corporation based upon the value of the water-power- right; and that the fixing of - the value of the water-power right at $50,000 is fully sustained by the evidence. The' order óf the railway commission is Affirmed.