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P.U.C. v. GENERAL WATERWORKS CORPORATION (01/31/73)

decided: January 31, 1973.

P.U.C., ET AL.
v.
GENERAL WATERWORKS CORPORATION, ET AL.



Original jurisdiction in the Commonwealth Court of Pennsylvania in case of Pennsylvania Public Utility Commission and Commonwealth of Pennsylvania v. General Waterworks Corporation; International Service Industries, Inc.; Business Service, Inc.; Energy Supply, Inc.; Steam Heat Services, Inc.; and Arthur G. Crimmins.

COUNSEL

Philip P. Kalodner, with him Susan M. Shanaman and Edward Munce, for plaintiff, P.U.C.

Peter Brown, Deputy Attorney General, with him J. Shane Creamer, Attorney General, for plaintiff, Commonwealth of Pennsylvania.

Charles B. Zwally, with him W. Russel Hoerner, for defendant, General Waterworks Corporation.

Judge Rogers. Opinion by Judge Rogers.

Author: Rogers

[ 7 Pa. Commw. Page 354]

We are required by Rule 63 of the Supreme Court to file a statement of our reasons for refusing a preliminary injunction in this matter.

The complaint of the Pennsylvania Public Utility Commission and the Commonwealth of Pennsylvania alleges that General Waterworks Corporation is a public utility in the State of Pennsylvania rendering steam heat service through the instrumentality of certain operating steam heat companies owned by it; that in February, 1972, General Waterworks Corporation caused the operating steam heat companies to seek approval of abandonment of service; that the applications for abandonment met opposition; that for the purpose of avoiding an order requiring General Waterworks Corporation to continue steam heat service, General Waterworks Corporation sold its shares in the subsidiary companies to another of the defendants, International Service Industries, Inc., and thereafter the applications for abandonment by the operating companies were withdrawn; that General Waterworks knew or should have known that International Service Industries, Inc. and the persons in control thereof were without experience to operate the steam heat companies, were financially irresponsible and had determined on a program to waste the assets of the operating companies; that General Waterworks received a $5,000,000 note as consideration for the conveyance of the companies which it knew was worthless; that following the sale, International Service Industries fraudulently spent and wasted the assets of the steam heat companies; that after the sale General Waterworks Corporation became aware of the mismanagement of the operating companies, and took no action against International Service Industries; that in November, 1972, the five operating steam heat companies filed petitions under Chapter XI of the

[ 7 Pa. Commw. Page 355]

Bankruptcy Act in the United States District Court for the Eastern District of Pennsylvania and that Receivers were duly appointed; that ". . . current opinion available indicated a serious question as to whether any means of financing is available to the five operating steam heat companies": and that ". . . should such resources not become available to the Receivers, all heating services will be denied" to their customers.

The Complaint is in two counts. Count I asks for a preliminary and permanent injunction ". . . enjoining General Waterworks Corporation from abandoning or discontinuing steam heat service heretofore rendered by it through the five steam heat companies" and an order nullifying the sale by General Waterworks to International Service Industries. Count II asks for an accounting by General Waterworks Corporation for the expenditure of some $500,000 in net current assets owned by the five steam heating companies when those companies were sold by General Waterworks Corporation to International Service Industries, and for an accounting for the deterioration in condition of the operating properties of the five companies sold to International Service Industries. At this stage of the proceedings we are concerned only with the request for a preliminary injunction enjoining General Waterworks Corporation from abandoning or discontinuing steam heat service.

The plaintiffs' theory is, we conceive, that General Waterworks Corporation is a public utility as defined by the Public Utility Law, Act of May 28, 1937, P.L. 1053, as amended, 66 P.S. § 1101 et seq.; that General Waterworks, being a public utility, was required by subsection 202(e) of the Public Utility Law, 66 P.S. § 1122(e), to obtain from the Public Utility Commission a ...


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