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YORK v. PUBLIC UTILITY COMMISSION (09/14/71)

decided: September 14, 1971.

YORK
v.
PUBLIC UTILITY COMMISSION



Appeal from the Orders of the Pennsylvania Public Utility Commission, Nos. C.18244-5, A.93644-5-6 and S.C. 3285 in case of In the Matter of the Application of York Telephone and Telegraph Company, Princeton Telephone Company and General Telephone Company of Pennsylvania.

COUNSEL

Spencer R. Liverant, with him Liverant, Senft & Cohen, George M. Elsesser, Jr., David W. Bupp, City Solicitor, and Jack H. Barton, City Solicitor, for appellants.

Walter L. Foulke, Deputy Attorney General, with him J. Shane Creamer, Attorney General, for intervening appellant.

Dominic J. Ferraro, Assistant Counsel, with him Edward Munce, Acting Counsel, for appellee.

Charles E. Thomas, with him Jack F. Aschinger, Metzger, Hafer, Keefer, Thomas & Wood, and Theodore F. Prophy, for intervening appellees.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Manderino, Mencer and Rogers. Opinion by Judge Mencer. Judge Manderino dissents. Opinion by Judge Wilkinson Concurring in Part and Dissenting in Part. Opinion by Judge Kramer (Concurring in Part and Dissenting in Part).

Author: Mencer

[ 3 Pa. Commw. Page 272]

In Northern Pennsylvania Power Company v. Pennsylvania Public Utility Commission, 333 Pa. 265, 5 A.2d 133 (1939), it was held that a public utility company has the right to sell its property or to enter into a merger with another company, subject only to restraint if against the public interest. The Court in that case approved the concept that a public utility corporation may manage its own affairs to the fullest extent consistent with the protection of the public interest and that the Public Utility Commission may not function as a board of directors or managers to conduct and control the internal affairs of public service companies

[ 3 Pa. Commw. Page 273]

    but may intervene only to enforce reasonable rates and for accommodation and necessity.

On December 21, 1970 the Pennsylvania Public Utility Commission (Commission) filed an order approving a merger of three telephone companies, General Telephone Company of Pennsylvania (General), York Telephone and Telegraph Company (York Telephone) and Princeton Telephone Company (Princeton). The approval of this merger was in the face of protests of the City of York and the County of York and the said order of the Commission dismissed the complaints which those two governmental units had filed relative to the change of a $6,000,000 indebtedness of York Telephone. We hold that Northern Pennsylvania Power Company v. Pennsylvania Public Utility Commission, supra, controls here and therefore we affirm the order of the Commission which approved the merger and dismissed the complaints to the change of the indebtedness of York Telephone.

The order of the Commission was the culmination of proceedings that had their genesis in May 1966 when the three telephone companies filed applications for approval of a merger and the issuance of a certificate of public convenience to General as the surviving company to render telephone service in the areas previously served by the three telephone companies. The City of York and the County of York (appellants) filed protests to the merger applications and also complaints against York Telephone's intended change of indebtedness by the redemption of $6,000,000 in long term bonds and the substitution of bonds and debentures at a higher rate of interest. In August 1966 the telephone companies requested leave to withdraw the applications for merger since the protests filed would have made impossible the necessary refinancing of the entire three properties as part and parcel of General as scheduled. The

[ 3 Pa. Commw. Page 274]

Commission granted the request to withdraw on October 24, 1966. In February 1967 the three telephone companies filed new merger applications to which the appellants also filed protests. Following considerable procedural skirmishing, hearings before the Commissioner's examiner were commenced on October 3, 1967. Following the initial hearings, appellants filed a petition for subpoena duces tecum to compel the telephone companies to produce various documents and records, including financial records from which certain of the financial data in the applications for merger were derived. After oral argument before the Commission, the petition was denied with leave to appellants to file an amended petition. Appellants did file an amended petition for subpoena duces tecum on August 9, 1968. By order, dated December 16, 1968, the Commission granted applicants' motion to dismiss the amended petition for subpoena duces tecum. However, it was pointed out in the Commission's order that at the request of the Commission a conference was held between a representative of the Commission, members of the Commission staff, and counsel for all parties to the proceedings which resulted in the telephone companies agreeing to make available to the appellants certain information requested in the amended petition for subpoena duces tecum. This information was supplied as agreed and it was made part of the record at the hearing held on March 5, 1969. The matter of the applications and complaints were briefed by the parties and argued before the Commission on June 24, 1969. The Commission, by its order of December 21, 1970, approved the merger and dismissed the complaints and this appeal followed.

We must first consider our scope of review. Whether this merger should be approved presents an administrative question for determination by the Commission

[ 3 Pa. Commw. Page 275]

    which must be left to the sound discretion of the Commission. Section 1107 of the Public Utility Law, Act of May 28, 1937, P.L. 1053, as amended, 66 P.S. 1437, provides: ". . . The order of the commission shall not be vacated or set aside, either in whole or in part, except for error of law or lack of evidence to support the finding, determination, or order of the commission, or violation, of constitutional rights. . . ." Section 1112 of the same Act, 66 P.S. 1442 provides: "Whenever the commission shall make any rule, regulation, finding, determination, or order under the provisions of this act, the same shall be prima facie evidence of the facts found. . . ."

Our authority to overrule an order of the Commission is limited. We may not disturb such an order except for errors of law, lack of evidence to support a finding, determination or order of the Commission, or violation of constitutional rights. Clemmer v. Pennsylvania Public Utility Commission, 207 Pa. Superior Ct. 388, 217 A.2d 800 (1966). Likewise, we may not exercise our independent judgment on the record or resolve conflicting evidence. Pittsburgh Railways Company v. Pennsylvania Public Utility Commission, 198 Pa. Superior Ct. 415, 182 A.2d 80 (1962). Our inquiry is directed to whether there is substantial evidence to support the Commission's action. Pittsburgh & Lake Erie Railroad Co. v. Pennsylvania Public Utility Commission, 170 Pa. Superior Ct. 411, 85 A.2d 646 (1952). Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Pennsylvania State Board of Medical Education and Licensure v. Schireson, 360 Pa. 129, 61 A.2d 343 (1948). Substantial evidence has also been said to mean evidence affording a substantial basis of fact from which the fact in issue can reasonably be inferred. Substantial evidence is synonymous

[ 3 Pa. Commw. Page 276]

    with competent and relevant evidence having a rational probative force. In Philadelphia Suburban Water Company v. Pennsylvania Public Utility Commission, 425 Pa. 501, 229 A.2d 748 (1967), it was held that in view of Section 1107 of the Public Utility Law of 1937, the Pennsylvania Public Utility Commission's exercise of its discretion must be accepted by the courts unless its action is totally without support in the record, or is based on an error of law or is unconstitutional.

Appellants maintain that there is not substantial evidence in the record to support the Commission's order approving the merger. With this contention we do not agree.

In addition to the extensive corporate and financial information concerning the three telephone companies and their operations contained in the merger application and exhibits introduced into evidence at the hearings, there was the testimony of R. W. Britt, President and a director of all three telephone companies, and of John C. Herbert, Vice President and a director of the same three companies. Mr. Britt has been employed in responsible positions by various telephone companies for a period of over twenty years and Mr. Herbert had twenty-four years of service with York Telephone. He has been a Vice President of the three telephone companies in question since 1960.

Mr. Britt testified to the correctness of the facts set forth in the applications and as to the exhibits pertaining to the redemption of the preferred stock and first mortgage bonds of York Telephone.

Mr. Herbert testified that the merger would have no adverse effect on the customers of either General, York Telephone or Princeton, but rather there would be benefits to these customers. He testified that the merger would result in a stronger company; that ...


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