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SAYRE LAND COMPANY v. PENNSYLVANIA PUBLIC UTILITY COMMISSION. (11/16/61)

November 16, 1961

SAYRE LAND COMPANY, APPELLANT,
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION.



Appeal, No. 7, March T., 1961, from decree of Court of Common Pleas of Dauphin County, No. 2117 Equity Docket 1954, No. 150 1/2 Commonwealth Docket, 1954, in case of The Sayre Land Company v. Pennsylvania Public Utility Commission. Decree reversed.

COUNSEL

James H. Booser, with him Harry H. Frank, and McNees, Wallace & Nurick, for appellant.

Edward Munce, Assistant Counsel, with him Joseph I. Lewis, Chief Counsel, for Pennsylvania Public Utility Commission, appellee.

Before Ervin, Wright, Woodside, Watkins, Montgomery, and Flood, JJ. (rhodes, P.j., absent).

Author: Ervin

[ 196 Pa. Super. Page 418]

OPINION BY ERVIN, J.

The single question in this appeal is whether the appellant, The Sayre Land Company, is a public utility subject to the Pennsylvania Public Utility Commission's regulatory functions.

By Complaint In Equity For a Final Injunction, filed June 28, 1954, The Sayre Land Company, a corporation of, and doing business in, the Commonwealth of Pennsylvania, hereinafter referred to as "Land Company," filed this complaint,*fn1 seeking a permanent injunction

[ 196 Pa. Super. Page 419]

    to compel the Pennsylvania Public Utility Commission, hereinafter referred to as the "Commission," to forthwith dismiss and discontinue all proceedings pending before it in complaints entitled "Borough of Sayre v. The Sayre Land Company" docketed at C. 15700,*fn2 and "Borough of Athens v. The Sayre Land Company," docketed at C. 15701,*fn2 and in an investigation

[ 196 Pa. Super. Page 420]

    upon Commission motion entitled "Pennsylvania Public Utility Commission v. The Sayre Land Company," docketed at C. 13907-43.*fn3 The answer of the Commission was filed July 19, 1954. A reply was filed by the Land Company on August 13, 1954.

On January 28, 1960 the court below filed a final decree dismissing the Land Company's bill. Land Company appealed. The court below found that Land Company was a public utility as defined in the Public Utility Law and it follows, of course, that as such Land Company would be subject to all of the laws and regulations governing public utilities.

Substantially all of the facts involved in this controversy appear in the 77 findings of fact made by the court below.

In the years 1870 and 1871, Howard Elmer and Charles F. Anthony and two associates purchased 738 acres of land lying in Athens Township between the Villages of Waverly and Athens in Bradford County, Pennsylvania, and in the latter year laid out the plans and streets of the Village of Sayre and began the erection of commercial and residential buildings. In 1878 R. A. Packer, H. E. Packer, Elisha P. Wilbur and Robert Lockhart purchased a one-half interest in this development from the executors of the estate of Charles F. Anthony. On May 23, 1879, under the provisions of the Act of April 29, 1874, P.L. 73, The Sayre Land Company was incorporated "for the purpose of purchasing and improving real estate and selling the same in lots or parcels."

[ 196 Pa. Super. Page 421]

On August 25, 1881, the Sayre Water Company was incorporated under the provisions of the above mentioned Act of Assembly "for the purpose of supplying water to the public of the Villages of Sayre, Athens and vicinity in the Township of Athens, Bradford County." In furtherance of the real estate development and improvement, Land Company constructed a waterworks and water supply system, together with buildings, fixtures, appurtenances and equipment necessary for the development and improvement of the above mentioned real estate. On May 27, 1885 Land Company executed what the appellant terms a lease and which the appellee terms an agreement, for use by Water Company of the waterworks properties owned by Land Company.*fn4

[ 196 Pa. Super. Page 427]

On May 28, 1896 the Land Company and Water Company entered into a written agreement modifying the rental to be paid under the above mentioned instrument.*fn5

[ 196 Pa. Super. Page 428]

The court below specifically found: "That under the terms of the instrument the Water Company must, and in fact does: (1) keep and maintain the property in good order and condition; (2) punctually pay and satisfy all taxes, charges and assessments upon the property or upon the business carried on by the Water Company; and (3) indemnify and save harmless the Land Company from all liabilities, claims, suits, costs,

[ 196 Pa. Super. Page 429]

    damages and expenses resulting from or occasioned by any act or omission of the Water Company in the use, management and control of the premises and property or the business of the Water Company.

"(a) The Sayre Water Company has in the past and does presently comply with these provisions of the instrument between The Sayre Land Company and The Sayre Water Company.

"(b) The Sayre Land Company performs none of the duties imposed upon The Sayre Water Company by the terms of said instrument."

The Water Company also has been and is now operating the water supply property and rendering the service of supplying the public with water for compensation. It is and has also been making, demanding and receiving all rates or other compensation from the public for the water supplied. Eighty per cent to ninety per cent of the original cost of plant facilities used and useful in rendering water service to the public for compensation is owned by Land Company but leased to Water Company. The extensions of and additions to facilities which are necessary to convey water up to and including the curb well and curb cock have in the past been made and are presently made by the Land Company and have been and are presently paid for by Land Company and have been and are presently owned by Land Company.

The following officers and directors of the two companies are identical. These include the following: George M. West, director of both the Water Company and the Land Company and president of both Water Company and Land Company; Howard E. Bishop, director of both Water Company and Land Company and vice-president of both Water Company and Land company; Eldridge P. Wilbur, director of both Water Company and Land Company and second vice-president of both Water Company and Land Company; David C.

[ 196 Pa. Super. Page 430]

Meyer, director of both Water Company and Land Company, general Manager of both companies, secretary of both companies, and treasurer of both companies; Albert E. Theetge, director of both Water Company and Land Company and assistant treasurer of both Water Company and Land Company.

The five individuals above mentioned own stock in both companies but own less than 1/2 of the shares of Water Company and own 12 1/2 per cent of the shares of Land Company. The offices of both companies are located in the same building in Sayre and the stockholders and directors of each company meet there on the same date but at a different hour.

The two companies share the services of some employees but such individuals are paid separately by each company for the work performed for that company.

The great majority of stockholders in Land Company are not stockholders in Water Company. Water Company owns no stock of Land Company and Land Company owns no stock of Water Company.

Water Company has a general manager and a number of persons are employed solely by it. These employees include a chemist, office clerk, a number of meter readers, two meter repairmen and two pumping station operators. It keeps its own books and records and issues its own annual reports. It pays its own capital stock tax and its own corporate net income tax. It owns and maintains the equipment, meters, fixtures, trucks, tools and office equipment used in operating the waterworks and furnishing water to the public. It maintains all property used in its business, including the property leased from Land Company, and pays all taxes thereon. It has possession and control of the water property. It receives and decides on applications for extension of service. It pays the operating and general expenses in connection with the operating

[ 196 Pa. Super. Page 431]

    and maintaining of all the water properties used in supplying water to the public. It bills consumers and receives payment for water furnished in accordance with tariffs it regularly files with the Commission at rates determined by Water Company subject to commission approval. Water Company has at all times operated said water supply property. Land Company has never operated the water supply property.

Water Company has at all times been subject to the jurisdiction and regulation of the Pennsylvania Public Utility Commission and its predecessor, Public Service Commission. It pays annual assessments for the operation and expenses of the Commission. It files the annual reports required of public utilities; it regularly files tariffs for water service. The Commission has fully determined the reasonableness of the rates of Water Company. Land Company has not considered itself a public utility and has filed no tariffs or annual reports and has paid no Commission assessments.

Water Company has at all times been in full compliance with the regulations and orders of the Commission. There is no evidence and there is no finding of fact establishing any inadequacy of service or any service complaints nor is there any contention that the rates are too high.

The court below concluded that Land Company was a public utility because (1) it owned a substantial proportion of the plant and equipment used by Water Company and (2) that Land Company operated the ...


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