Wisconsin Traction, Light, Heat & Power Co. v. Green Bay & Mississippi Canal Co.

Eschweiler, J. The Traction Company,' the petitioner below, concededly a public utility, sought to condemn certain property and rights of the appellant corporation, the Canal Company, under an exercise of the right of eminent domain through the proceedings outlined in ch. 32, Stats. The appellant challenges the right of the Traction Company so to do, on the ground that the Canal Company is also a — 63 — public utility and protected from condemnation proceedings by sec. 32.03, found in the same chapter, and which provides that the general power of condemnation in that chapter shall not extend, unless specifically conferred by law, to the condemnation by one public utility of the property of another. By ch. 499, Laws of 1907, enacting secs. 1797m — 1 to 1797m — 108 (now found as sec. 196.01 et seq.), public utilities were defined, control and regulation thereof assumed by the state, and the railroad commission vested with certain jurisdiction or power over them. The broad field intended to be covered and the wide sweep and scope of the powers to1 be thereafter exercised by the state over those who dedicate their property to public service has been often passed upon by this court and nothing need be now added to what has been said as to such field and power, for instance in Calumet Service Co. v. Chilton, 148 Wis. 334, 337, 338, 135 N. W. 131, or perhaps to cite, as illustrating the extent to which this new public policy has changed the old theories as in even such a substantial and fundamental branch of the law as that of real estate, that it is now the law that that which in other ownership would be real estate is, when owned and used by a public utility, personal property. Ireland v. Tomahawk L., T. & I. Co. 185 Wis. 148, 151, 200 N. W. 642; Superior W., L. & P. Co. v. Superior, 174 Wis. 257, 296, 181 N. W. 113, 183 N. W. 254. A public utility, as defined in sec. 196.01, Stats., so far as pertinent to the situation here, is any corporation that may own, operate, manage, or control any plant or equipment or any part of a plant or equipment within the state, for the production, transmission, delivery, or furnishing of heat, light, water, or power either directly or indirectly to or for the public. The question whether a corporation such as is the Canal Company is or is not a public utility in this state is one to be ultimately determined by the judiciary, by applying the statutory definition of a public utility to the facts con — 64 — cerning and the physical situation of any such company. The solution of the question is not dependent upon the attitude which the corporation may itself assume by either submitting to1 or refusing to submit to the jurisdiction and control of the railroad commission; nor again, upon whether or not the railroad commission has as yet assumed control and jurisdiction or failed or refused so to do. See Schumacher v. Railroad Comm. 185 Wis. 303, 201 N. W. 241. It is very clear that under the record as here presented the valuable asset of the Canal Company is the right it owns and holds to use the surplus water power of the Fox river, subject to the primary right of the United States government to regulate and control the amount thereof as needed-for navigation purposes, rather than its real estate adjacent to the river. It was this very thing that in 1901 the Traction Company included in its lease from the Canal Company, it being there designated as the right to use for hydraulic power one half (less specific reservations) of the flow of the Fox river not required for navigation at the Grand Chute dam, the one here in question, and it is the same that is sought to be condemned by the Traction Company and which it described in its petition in substantially the same language. It is this water-power right, the possibility of generating hydro-electric energy, that the Canal Company has declared its intention, as set forth in the statement of facts, from now on, or for the coming decade at least, shall be placed in the electric-power field. There are no precise formalities which must be undergone before a corporation becomes a public utility and default in which is an insuperable barrier to its becoming such. As pointed out in Kilbourn City v. Southern Wis. P. Co. 149 Wis. 168, 180, 181, 135 N. W. 499, it is not necessary that service by such corporation shall actually begin before its duties and liabilities as such arise or are imposed, other — 65 — wise, as in that case pointed out, it might contract prior to actual service to evade the law as to uniformity of rates. Whether the Canal Company, by virtue of its contract with the United States in 1872 and the prior acts of our legislature, is in a better or different position, has a higher or different title to surplus flow of the Fox river, than are or have been water-power companies on other of the navigable rivers of our state, need not be now considered, for in any event, as is pointed out in In re Crawford County L. & D. Dist. 182 Wis. 404, 409, 196 N. W. 874, the state, under the ordinance of 1787 and our constitution, is a trustee of the navigable waters within our confines, not merely for the people of this state but of the United States, and that the federal authority is paramount, and citing Economy L. & P. Co. v. U. S. 256 U. S. 113, 41 Sup. Ct. 409, — the latter, an interesting case, holding that though actual navigation on the Desplaines river in Illinois had been abandoned for one hundred years, nevertheless an obstruction there, even though to utilize its water power, but without prior federal consent, must be removed. From the earliest days of our statehood the state has assumed control, through the Milldam Act, of the utilization of the water powers in its rivers. Whether always recognizing the paramount authority of the United States it is immaterial to now inquire, for such was always there, and, as held in Economy L. & P. Co. v. U. S., supra, such paramount control existed before, as well as after, Congress passed definite laws on the subject. The state has justified the giving of the somewhat drastic power involved in the exercise of eminent domain to those' seeking to build dams and to overflow their neighbor’s land because of the public interest in the utilization of such latent power. Allaby v. Mauston E. S. Co. 135 Wis. 345, 351, 116 N. W. 4; McDonald v. Apple River P. Co. 164 Wis. 450. 456. 160 N. W. 156. — 66 — This power, when vested in a corporation, to control the water power, the so-called white coal of the state, is coupled with an authority and duty separate and quite distinct from ordinary corporate authority, as is pointed out in Wis. River Imp. Co. v. Pier, 137 Wis. 325, 337, 118 N. W. 857. When such a company enters the field of furnishing and selling the water power created by dams in our navigable waters it in effect dedicates such water power to a public use. Pier Case, supra, p. 336. When by ch. 380, Laws of 1915, the legislature placed the subject matter of the Milldam Act under the control of the railroad commission, it still more emphasized its intention of broadening the scope of public interest in its water power. We think, therefore, that for these reasons the Canal Company, at the time when the condemnation proceedings here were started, was a public utility within the meaning of sec. 196.01, Stats. There is still another and substantial reason why the Canal Company is within the field of public utilities. Its contract with the city of Kaukauna on February 1, 1923, and the terms of which have been set out in the foregoing statement of facts, was of such a nature that the Canal Company thereby placed itself in the position of one furnishing hydro-electric energy to the public. It leased an already erected and evidently then operating hydro-electric plant to the city of Kaukauna. That the city was described in the lease as a “public utility” as well as- municipality, and tire Canal Company was described merely as a corporation and not as a “public utility,” could not change the legal effect. The Canal Company reserved plenary power over the employees who were to run the plant and had an absolute veto on their continued employment although not paying their wages. The rental was measured per electrical energy generated. Very significant features are the provisions that in case the city of Kaukauna obtained an increase in rates for electric service from its customers, the public, — 67 — it must increase the rent to the Canal Company by fifty per cent, of the net profit derived from such increase, and that the lease expressly provided for the contingency of the Canal Company becoming openly and beyond question a public utility. We consider this lease to be an unequivocal act by which the Canal Company undertook' to furnish, directly or indirectly, hydro-electric power for lighting and heating purposes to the public, and by so doing the Canal Company, willy-nilly, was a public utility. It was as clearly a public utility as was the lessor in Wisconsin E. P. Co. v. Lake, 186 Wis. 199, 202 N. W. 195, where the builder and owner of the power plant leased all the power therein generated to a street-car company, which latter and not the owner actually operated the plant, that case, however, involving the income tax law rather than the statutes here considered. Therefore, in view of the record as presented, we reach the conclusion that the Canal Company, at the time of the institution of the condemnation proceedings^, being a public utility within the purview and meaning of the statute, the objection interposed to the condemnation by another public utility of its, the Canal Company’s, property should have been sustained and the proceedings in the circuit court dismissed. This determination as to its immunity from these proceedings makes it unnecessary to pass upon the many other questions presented and argued, and we do not decide them. By the Court. — Orders reversed, and the cause remanded with directions to dismiss the proceedings.