Opinion
12-21-1962
CITIZENS UTILITIES COMPANY OF CALIFORNIA (a Corporation), Petitioner, v. The SUPERIOR COURT OF SANTA CRUZ COUNTY, Respondent; SAN LORENZO VALLEY COUNTY WATER DISTRICT (a Public Corporation), Real Party in Interest. S. F. 21175.
Bacigalupi, Elkus & Salinger, Claude N. Rosenberg and William G. Fleckles, San Francisco, for petitioner. Wilson Harzfeld, Jones & Morton and John E. Lynch, San Mateo, for real party in interest.
CITIZENS UTILITIES COMPANY OF CALIFORNIA (a Corporation), Petitioner,
v.
The SUPERIOR COURT OF SANTA CRUZ COUNTY, Respondent;
SAN LORENZO VALLEY COUNTY WATER DISTRICT (a Public Corporation), Real Party in Interest.
Bacigalupi, Elkus & Salinger, Claude N. Rosenberg and William G. Fleckles, San Francisco, for petitioner.
No appearance for respondent.
Wilson Harzfeld, Jones & Morton and John E. Lynch, San Mateo, for real party in interest.
WHITE, Justice pro tem.
Prohibition is sought by Citizens Utilities Company of California to restrain respondent superior court from proceeding to trial in an eminent domain action wherein petitioner's Boulder Creek District Water system, excepting only office equipment and furnitiure, is sought to be condemned and acquired by real party in interest San Lorenzo Valley County Water District. Respondent court determined that petitioner would receive just compensation for the condemnation of its water system if the property of the enterprise as described in the complaint, plus any reasonable improvements and extensions added thereto prior to trial, are valued at date of trial. Petitioner challenges the latter determination by respondent, contending that no method was there provided or indicated for valuation of extensions and betterments added under compulsion of law after date of trial and prior to acquisition of possession.
Petitioner's Bulder Creek District water system apparently services an area experiencing population growth, and as a public utility that system is obligated by law to maintain and extend adequate water service to all users in the district. (Cal. Water & Tel. Co. v. Public Util. Com., 51 Cal.2d 478, 493, 334 P.2d 887; Pub. Util. Code, § 451.) Also, it appears that water utilties are required to install and maintain at their own expense equipment and service lines, including water meters, up to the user's property line. (G. B. Humphrey, 36 C.R.C. 157, 158.)
It is alleged by petitioner that real party in interest San Lorenzo Valley County Water District, as a political subdivision, held bond elections in 1957 and 1961, obtaining authorization from the electorate to sell an aggregate of $1,500,000 in revenue bonds for the purpose of acquiring, constructing, and improving a water supply system for the inhabitants of said district. The bonds have not been sold, nor has real party alleged that steps have been taken so as to expedite sale of the bonds and the procurement of the acquisition funds before trial or immediately after judgment. Condemnation proceedings have been duly instituted however, and service of summons was made upon petitioner November 20, 1961.
In its answer petitioner averred that the value of its water system was $1,500,000, and asserted as affirmative defense to the action that condemnation of its system pursuant to the general eminent domain statutes (Code Civ.Proc. pt. 3, tit. 7) would constitute deprivation of property without payment of just compensation, in that section 1249 of the Code of Civil Procedure appeared to prohibit payment of compensation for any improvements or extensions made after November 20, 1961, in discharge of its legal obligations as a public utility. In support of its motion to dismiss for lack of jurisdiction, petitioner presented an affidavit by the general manager of its water operations stating that 'On December 31, 1961 Defendant had improvement work in progress in connection with the said water system amounting to the sum of $350,614,' and that during the period November 30, 1961 to January 31, 1962 alone, defendant expended $24,200 'for the purpose of preserving and improving its said water system.' The affiant further declared that the Boulder Creek District will be required to make similar expenditures for improvements and extensions during the entire duration of the eminent domain proceedings, including that period prior to the point of actual take-over by real party. While real party does properly point out that the above affidavit fails to indicate the type and kind of the improvements and betterments to petitioner's system which comprised the $24,200 expenditure, it would seem fair to assume that such an expenditure resulted in some increase in value of the water system.
Section 1249 of the Code of Civil Procedure provides that: 'For the purpose of assessing compensation and damages the right thereof shall be deemed to have accrued at the date of the issuance of summons and its actual value at that date shall be the measure of compensation for all property to be actually taken * * *. No improvements put upon the property subsequent to the date of the service of summons shall be included in the assessment of compensation or damages.'
Petitioner's contentions concerning the unconstitutionality of applying herein the valuation date provided for in above section 1249, especially the last sentence thereof expressly prohibiting assessment of compensation for improvements made subsequent to date of summons, need not be discussed, since it is apparent that section 1249 does not contemplate improvements made after service of summons under compulsion of law. While the latter prohibition of section 1249 is reasonable in the usual condemnation situation, since the condemnor should not be forced to compensate the owner for improvements added after date of summons which are prbably of no benefit to the condemning authority, or which might have been added by the owner in bad faith, application of such a prohibition to the valuation of an operating and necessarily expanding public utility system would be unreasonable. Such a construction of section 1249 is in accord with the fundamental principle of statutory construction that laws should be sensibly interpreted, and that general terms in statutes will not be construed so as to lead to unjust or oppressive results. (Cotton v. Superior Court, 56 Cal.2d 459, 15 Cal.Rptr. 65, 364 P.2d 241; see County of Los Angeles v. Riley, 6 Cal.2d 625, 629, 59 P.2d 139, 106 A.L.R. 903.)
Moreover, the conclusion that section 1249 of the Code of Civil Procedure does not prohibit awarding of compensation to petitioner for reasonable improvements added under legal duty subsequent to service of summons follows from Redevelopment Agency of City & County of San Francisco v. Maxwell, 193 Cal.App.2d 414, 417-419, 14 Cal.Rptr. 170. The Maxwell case held that in spite of the mandate of section 1249, destruction of the property by fire after summons issued should be considered by the trier of fact in diminution of the award. It involuntary destruction of the property after issuance of summons may be considered in an award of compensation, notwithstanding the language in section 1249, it would appear that involuntary betterment of the property may be considered in assessing an award, especially where, as here, in all probability the improvements will be of use and value to the condemning water district. (See also Harden v. Superior Court, 44 Cal.2d 630, 635, 284 P.2d 9.)
As hereinbefore stated, the trial court indicated that it could devise a procedure whereby the value of petitioner's water system would be assessed at date of trial. Petitioner challenges the power of the trial court to so devise a procedure, but since the constitutional provision compelling payment of just compensation for public taking of private property (Cal. Const. art. I, § 14) is self-executing, inherent power is reposed in the court to provide for the assessment of just compensation in situations not within the purview of existing statutory provisions. (Metropolitan Water Dist. of Southern California v. Adams, 16 Cal.2d 676, 679-681, 107 P.2d 618; See Bacich v. Board of Control, 23 Cal.2d 343, 346, 144 P.2d 818; Rose v. State of California, 19 Cal.2d 713, 719-721, 123 P.2d 505; see also Beveridge v. Lewis, 137 Cal. 619, 623, 67 P. 1040, 70 P. 1083, 59 L.R.A. 581.) Respondent court was thus empowered to devise a procedure whereby the value of petitioner's water district might be justly assessed.
However, the critical question herein concerns the adequacy of the trial court's indicated procedure providing for valuation at date of trial, where it appears reasonably certain that take-over of possession by real party will be delayed beyond judgment. Respondent court has not indicated that any attmept would be made to compensate petitioner for improvements added subsequent to judgment, in compliance with its legal obligations as a public utility. It is here significant that section 1251 of the Code of Civil Procedure provides that where a public corporation must sell bonds to acquire the condemned property, the judgment need not be paid for one year after entry of judgment, plus any period of time wherein the validity of the bond issue is litigated. And the assessed compensation must be paid prior to plaintiff's taking possession. (Code Civ.Proc. § 1254, subd. (a).) It would appear, according to petitioner's allegations not substantially controverted by real party, that in the interim period between judgment and take-over, extensions and improvements will be added to the water system at petitioner's expense.
It is then contended that it is unconstitutional to condemn a public utility under any procedure which fails to provide for inclusion in the award of the value of improvements compulsorily made pending the proceeding and until final take-over of possession. (See Arizona Corporation ,.com'n v. Tucson Gas, Elec. L. & P. Co. (1948), 67 Ariz. 12, 189 P.2d 907, 910-911; N. J. Water Service Co. v. Butler (1930), 105 N.J.L. 563, 565-566, 148 A. 616; Passaic etc. Water Co. v. McCutcheon (1929), 105 N.J.L. 437, 442-443, 144 A. 571.) Especially pertinent are the cases of Iowa Electric Light & Power Co. v. City of Fairmont (1954), 243 Minn. 176, 67 N.W.2d 41, and Public Utility District v. Washington Water Power Co. (1944), 20 Wash.2d 384, 147 P.2d 923. In Iowa Electric, it was specifically held that the defendant public utility 'should be properly compensated for any such betterments, extensions, or improvements it was required to make after the award was made but before relinquishing possession of the property.' (243 Minn. at 185, 67 N.W.2d at 47.) Similarly, it was pointedly held in the Washington Water Power case that 'For any such betterments and improvements as may be reasonably necessary and prudently made between the date of the awards and the orders of appropriation, the defendant is entitled to compensation; and the judgments should so provide.' (20 Wash.2d at 392, 147 P.2d at 928; see Ill. Cities Water Co. v. Mt. Vernon, 11 Ill.2d 547, 552-553, 144 N.E.2d 729, 68 A.L.R.2d 384 (ordinary rules for condemnation valuation must be adjusted so that public utility is in as good financial condition after transfer of possession as before); see also Sacramento etc. Dist. v. Pac. Gas & Electric Co., 72 Cal.App.2d 638, 651, 165 P.2d 741.)
The foregoing authorities may be said to establish the principle that in the assessment of damages for condemnation of a public utility which is obligated by law to make continuing improvements and betterments in its system, a procedure must be followed whereby the utility is compensated for any such betterments added during the pendency of the condemnation proceedings up to the point of actual takeover of possession by the condemning authority. (See Cal. Const. art. I, § 14.) Thus, the trial court's projected action in assessing compensation as of date of trial is inadequate.
But it next must be considered whether, consistent with petitioner's right as a defendant in a condemnation action to the ascertainment of its compensation damages by a jury (Cal.Const. art. I, § 14; People ex rel. Department of Public Works v. Russell, 48 Cal.2d 189, 195, 309 P.2d 10), which right it does not appear petitioner has waived in the basic action (see Cal. Const. art. I, § 14), the suit below might be allowed to proceed solely on the basis of the eminent domain procedures contained in the Code of Civil Procedure (pt. 3, tit. 7, § 1237 et seq.).
In the case of Public Utility District v. Washington Water Power Co., supra, 20 Wash.2d 384, 392, 147 P.2d 923, it was merely stated by the court, in allowing the action to proceed, that the defendant utility had the right to damages for improvements added prior to take-over. Although it appears that the original award was there ascertained by a jury, the court did not discuss the question, if indeed it was critically relevant under Washington law, whether the subsequent adjustment of the award would be ascertained by the jury as well. While it might seem feasible for the court, especially the judge who tried the cause, to adjust the award, a procedure whereby another jury would be convened after the relinquishment of possession in order to adjust the original jury award would not seem practical. Considerable duplication of evidence can be foreseen, since particular subsequent improvements would have to be valued not at their cost but according to the amount by which their presence enhanced the fair market value of the entire utility system (see Pacific Gas & Electric Co. v. Devlin, 188 Cal. 33, 38, 203 P. 1058; City of North Sacramento, 56 Cal.P.U.C. 554, 560-561), necessitating evidence of the value of those elements of the total system functionally related to the improvements. Nor did the court in Iowa Electric Light & Power Co. v. City of Fairmont, supra, 243 Minn. 176, 67 N.W.2d 41, discuss the problem of how the original award was to be adjusted for later improvements, although the public utility there involved did not have the right to have compensation ascertained by a jury. (See 243 Minn. at 177, 181-182, 67 N.W.2d at 43, 45-46.) Furthermore, there is some question whether a trial judge has power to modify the properly returned condemnation award of a jury. (See San Francisco, City & County of, v. Superior Court, 94 Cal.App. 318, 321-323, 271 P. 121.)
It would appear therefore, that since no practical solution appears available whereby petitioner's constitutional right to the ascertainment of compensation damages by a jury (Cal.Const. art. I, § 14) may be guaranteed as to those improvements and betterments petitioner will be required to add to its water system after date of trial and prior to its relinquishment of possession to real party, the instant condemnation action based upon the procedures in part 3, title 7 of the Code of Civil Procedure, should not proceed further.
The latter conclusion does not in any way prevent real party from acquiring petitioner's water system, since the Public Utilities Code provides a procedure whereby a public utility may be condemned by a political subdivision (Pub.Util.Code, div. 1, pt. 1, ch. 8, 'Determination of Just Compensation for Acquisition of Utility Properties,' §§ 1401-1421), and compensation adjusted for improvements in or destruction of the property pending take-over. (Pub.Util.Code, §§ 1417-1419.) It appears that under the Public Utilities Code procedure a complete formula is provided for valuation of subsequently added betterments. (See Sacramento etc. Dist. v. Pac. Gas & Electric Co., supra, 72 Cal.App.2d 638, 651, 165 P.2d 741; City of Redding, 20 C.R.C. 1022, 1023.)
The problem of right to ascertainment of condemnation damages by a jury, provided in article I, section 14 of the California Constitution, is not presented under the foregoing statutory procedures outlined in the Public Utilities Code, since article XII, section 23a of the California Constitution expressly provides that: 'The Railroad Commission (Public Utilities Commission) shall have and exercise such power and jurisdiction as shall be conferred upon it by the Legislature to fix the just compensation to be paid for the taking of any property of a public utility in eminent domain proceedings by * * * any * * * municipal water district * * * or other public corporation or district, and the right of the Legislature to confer such powers upon the Railroad Commission is hereby declared to be plenary and to be unlimited by any provision of this Constitution. * * *' (See East Bay Municipal Utility Dist. v. Railroad Com., 194 Cal. 603, 617, 229 P. 949 (legislation authorized by article XII section 23a may deprive utility owner of jury trial where commission ascertains value of property).)
In an attempt to uphold the application of the general eminent domain procedures as provided in the Code of Civil Procedures to the instant condemnation situation, real party refers us to section, 1421 of the Public Utilities Code. That section states: 'The procedure provided in this chapter (the Public Utilities Commission condemnation procedure mentioned above) shall be alternative and cumulative and not exclusive, and the political subdivision shall continue to have the right to pursue any other procedure providing for the acquisition under eminent domain proceedings of the lands, property, and rights of any public utility. This chapter shall not be construed as repealing any law of this State providing for such eminent domain proceedings.' Also relevant here is section 1240 of part 3, title 7 of the Code of Civil Procedure, which provides: 'The private property which may be taken under this title includes: * * * 5. Franchises for any public utility, and all kinds of property of any nature whatsoever used, either during the existence of or at the termination of said franchise, to supply and furnish the service of such public utility * * *.' (See Code Civ.Proc. § 1241; Water Code, §§ 31040, 31042, 31043, 31044.)
While it would thus appear that a county water district has general authority to condemn property, including public utility systems, under the eminent domain provisions of the Code of Civil Procedure, that authority cannot be constitutionally exercised in the instant condemnation situation. As indicated, it is at once apparent that an interval will ensue after trial and before takeover wherein petitioner must improve, extend, and better its water system. Also, petitioner has given no indication that it will waive its right to the ascertainment by a jury of the value of such post-trial improvements, and it does not appear feasible or practical to hold two separate jury trials as to damages.
Prohibition may properly issue in the instant situation, since it does not appear that real party will possess the funds to pay an award and so take possession immediately after judgment, petitioner's obligation as a public utility to make improvements will continue after judgment, and respondent court has ruled that damages will be assessed only up until date of trial. Thus the present case differs from situations where prohibition is improperly sought to restrain action anticipated but not yet taken by a lower court, as in Estate of Turner, 181 Cal. 467, 468, 185 P. 171, Benvenuto v. Superior Court, 181 Cal. 293, 184 P. 672, McAdoo v. Sayre, 145 Cal. 344, 351, 78 P. 874, or Hall v. Superior Court, 70 Cal.App. 393, 399, 233 P. 80. Furthermore, 'it must be determined in each case, not only on the basis of precedent but from an examination of all the facts, whether there is an adequate remedy in the ordinary course of law.' (Rescue Army v. Municipal Court, 28 Cal.2d 460, 467, 171 P.2d 8, 13.) The facts present in the case now engaging our attention, wherein a public utility system is sought to be condemned in a forum furnishing inadequate valuation procedures while adequate alternative procedures are available for such a case in another forum, impel the conclusion that respondent court is without jurisdiction to compel petitioner to submit to such an inadequate procedure, so that prohibition properly should issue herein. (See Harden v. Superior Court, supra, 44 Cal.2d 630, 634-635, 284 P.2d 9; Abelleira v. District Court of Appeal, 17 Cal.2d 280, 291, 109 P.2d 942, 132 A.L.R. 715.)
Let the peremptory writ of prohibition issue as prayed.
GIBSON, C. J., and TRAYNOR, SCHAUER, McCOMB, PETERS and TOBRINER, JJ., concur. --------------- 1 As set forth in more detail infra, there is a well established procedure provided in the Public Utilities Code, section 1401 et seq., for condemnation of public utility systems, and for adjustment of the original award to conform to the value of the utility when possession is relinquished. 2 Sections 1403 and 1404 of the Public Utilities Code allow a political subdivision to petition the Public Utilities Commission for the latter to fix the just compensation which the condemning subdivision shall pay for the described property of the utility. After hearings the commission fixes the compensation 'as of the day on which the petition was filed with the commission.' (§ 1411.) Thereafter an action may be filed in the superior court to litigate the right of the condemnor to take the property, but the judgment in such action shall incorporate the commission's findings of just compensation, and said finding 'shall not be subject to modification, alteration, reversal, or review by any court of this State.' (§ 1416). But the 'judgment of the court shall include a provision, in substance, that it is subject to modification by reason of such increase or decrease in the just compensation to be paid as may thereafter be certified to the court by the commission.' (§ 1416.) Section 1417 of that code then permits both the condemnor and condemnee to petition the commission for adjustment of the finding of just compensation, and the judgment of the court is modified to incorporate the finding of net increase or net decrease in the commission's original finding of just compensation. (§ 1419). 'The judgment of the court, as thus modified, insofar as it refers to the just compensation to be paid for the lands, property, and rights, shall be final and shall not be subject to modification, alteration, reversal, or review by any court.' (§ 1419.) The filing of the petition or petitions to modify the award do not stay the condemnation judgment, and the condemnor may acquire immediate possession upon 'payment of the just compensation fixed in the original judgment of condemnation.' (§ 1419.) Thus it is possible under the Public Utilities Code procedures to adjust the award according to the market value of the utility property after actual take-over. For a partial history of a condemnation proceeding before the Public Utilities Commission, see City of North Sacramento (1957), 55 Cal.P.U.C. 494, City of North Sacramento (1958), 56 Cal.P.U.C. 554, and City of North Sacramento v. Citizens Utilities Co. (1961), 192 Cal.App.2d 482, 13 Cal.Rptr. 538.