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Citizens Valley View Co. v. Com. Comm.





APPEAL from the Circuit Court of Du Page County; the Hon. MELVIN F. ABRAHAMSON, Judge, presiding.


Rehearing denied September 26, 1963.

These proceedings began with the filing on May 23, 1960, by the Sunny Acres Sewer & Water Co. (hereinafter referred to as Sunny Acres), of a petition for a certificate of convenience and necessity to service some 800 acres of land in Du Page County with sewer and water. On June 14, 1960, Citizens Valley View Company (hereinafter referred to as Citizens Valley), sought to intervene in this proceeding, but on July 19, 1960, prior to any action by the Commission on the petition to intervene, filed its own application to service the same area. After a hearing before a hearing examiner the Commerce Commission allowed the application of Sunny Acres and denied that of Citizens Valley. The latter filed an action against the Commission and Sunny Acres to review the Commission's order in the circuit court of Du Page County. This appeal, taken directly to this court pursuant to section 69 of "An Act concerning public utilities" (Ill. Rev. Stat. 1961, chap. 111 2/3, par. 73), is from a judgment of the circuit court affirming the Commission's order.

The position of Citizens Valley here is two-fold: first, that as an existing and operating sewer and water utility in this area adjacent to the property requiring water and sewer service it was entitled to a certificate of public convenience and necessity as against the competing newly organized and non-operating company in the absence of any proof or specific finding by the Commission that it was not ready, willing and able to provide the needed services; and, secondly, that the evidence overwhelmingly established that Citizens Valley could provide the area in question with water and sewer services more efficiently, at a lower cost and at lower rates than could Sunny Acres, a newly formed company, and, therefore, the order authorizing Sunny Acres to provide such services was contrary to the evidence and law.

The property that is the subject of this suit lies near the intersection of Butterfield Road, which runs east and west, and Illinois 53, a north-south highway in Milton and York townships in Du Page County, and is hereinafter referred to as the Johnson property. It lies generally south and east of this intersection extending at varying depths for approximately two miles along Butterfield Road. Valley View subdivision is south and west of this intersection; and a subdivision known as McIntosh subdivision is to the northwest of said intersection; and another known as the Butterfield subdivision is approximately one-fourth to one-half mile east and north, abutting Butterfield Road. Just east of the Butterfield subdivision the Johnson property also extends to the north and lies on both sides of Butterfield Road. Upon 90 acres of the Johnson property lying adjacent to Butterfield subdivision and approximately one mile east of the above intersection an initial subdivision is proposed by one W.R. Johnson. The property sought to be served by Sunny Acres extends to the east another mile from the west edge of the proposed subdivision on both sides of Butterfield Road.

Sunny Acres at the time of the hearing was a new utility and had not yet commenced business. It was not serving any area nor was it authorized to serve any. It had no substantial assets, no utility management personnel, no engineers and no equipment. One existing water well located on the property owned by W.R. Johnson was, according to an engineer, adequate to form part of the initial water system. All other facilities, including water and sewer lines, would have to be newly constructed at an estimated cost of approximately $1,210,000.

Citizens Valley had been formed in 1957 and at the time of the hearing was authorized to serve the above-mentioned three subdivisions near the intersection of Butterfield Road and Route 53 and was actually rendering service to 230 homes in Valley View. This company was one of 11 Illinois subsidiaries of the Citizens Utilities Company (Delaware) operating in the Chicago area. The parent company also operated 11 other similar utility companies in other States. The Illinois companies jointly utilized twelve employees, including one manager, and five operators, as well as various trucks and other maintenance equipment. At the time of the hearing Citizens Valley water system consisted of two water wells in Valley View, a 180,000 gallon standpipe, 41,000 feet of pipe and 92 fire hydrants. Its sewer facilities included a treatment plant, 52,910 feet of pipe and 120 manholes. In connection with its proposed facilities to serve Butterfield subdivision, which were in the process of construction, a 10-inch water line had been installed along Butterfield Road, two new wells were proposed in the subdivision itself and an oxidation pond had already been built there. In order to serve the entire 800 acres applied for Citizens Valley would have to construct additional water wells and other facilities at an estimated cost of $455,000, although the initial 90-acre subdivision could be served simply by extending the lines already proposed for the Butterfield subdivision.

In approving Sunny Acres' application the Commission found, among other things, that (1) Sunny Acres' application was filed 56 days prior to that of Citizens Valley; (2) the area proposed to be served consists of 800 acres of unsubdivided land not presently served by any water or sewer utility, 90% of which land is owned by W.R. Johnson, who is to be the major shareholder of Sunny Acres; (3) W.R. Johnson plans to subdivide in excess of 700 acres of said land commencing with an initial subdivision of 90 acres; (4) W.R. Johnson requested Sunny Acres to furnish the water distribution and sewage collection and disposal service to the entire above area, not just the 90-acre initial subdivision. Sunny Acres is ready, willing and able to furnish said facilities to the entire area and proposes to provide such service at its own expense as it is required; (5) Citizens Valley proposes to serve the above area upon the condition that all sewer and water main expense be paid by persons applying for service, who would be repaid to the extent of 40% of the actual cost of installation over a 10-year period; (6) Citizens Valley has been authorized to provide sewer and water utility service in three subdivisions lying to the west of the property in question, but is currently servicing only 230 homes in Valley View subdivision. This subdivision has a potential of 600 homes and the sewage treatment plant lying to the south of Valley View subdivision was designed to serve 600 homes. This capacity has been reduced due to existing sanitary water board standards. In the event appellant were certified to serve the area in question it would have to build a new plant or subsequently increase the capacity of its present facility; (7) the owner of the property has not requested appellant to provide utilities and will not develop said property should appellant be certified; (8) Sunny Acres has adequate financial resources available to enable it to furnish the requested services; (9) there is a present and future need for public sewer and water service in the area involved; there is no such service presently nor is there any available, and the public convenience and necessity require the granting of Sunny Acres' application; (10) Sunny Acres should be authorized to place in effect the rates, rules, regulations and conditions of service proposed by it.

The Commission's order is considered presumptively valid and cannot be set aside unless found to be clearly unreasonable or contrary to an established rule of law. (Chicago, North Shore and Milwaukee Railroad Co. v. Commerce Com. 354 Ill. 58.) Said order must, however, be supported by specific findings of fact based upon substantial evidence indicating that the basis for said order is fair and not unreasonable. Chicago, Rock Island and Pacific Railway Co. v. Commerce Com. 346 Ill. 412.

In support of its first position hereinbefore set forth Citizens Valley contends that the record establishes that it is the existing utility in the field, that it is entitled to a preference over Sunny Acres, a newcomer in the field, and that before a certificate of convenience and necessity could be issued to Sunny Acres a specific finding should have been made as to whether or not Citizens Valley was ready, willing and able to serve the area in question.

In Chicago & West Towns Railways, Inc. v. Commerce Com., 383 Ill. 20, 26-28, this court stated "The public policy underlying the granting of certificates of convenience and necessity to a newcomer in the field of transportation as against the rights of one already in the field and rendering service was fully considered in Egyptian Transportation System, Inc. v. Louisville and Nashville Railroad Co. 321 Ill. 580, * *. We know of no reason why the principles announced in the foregoing decisions should be departed from. * * * In our opinion the foregoing cases conclusively establish the right of appellants to have an opportunity as a regulated monopoly to render whatever service convenience and necessity may require, and it is only when it has been demonstrated that it is unable either from financial or other reasons to properly serve the public that a competing carrier will be allowed to invade the field. As the record stands the question was raised by the answer of appellants, and also by the offer of West Towns, but no evidence was taken by the commission which would justify it in granting a certificate of convenience and necessity to a competing carrier, until it has been established the utility in the field was unable to render the service. The commission should have made findings upon this proposition." (Italics added.)

In the case of Bartonville Bus Line v. Eagle Motor Coach Line, 326 Ill. 200, we held that "It is the policy in this State, established by legislation for the regulation of all public utilities, to provide the public with efficient service at a reasonable rate by compelling an established public utility occupying a given field to provide adequate service and at the same time protect it from ruinous competition, (Illinois Power and Light Corp. v. Commerce Com. 320 Ill. 427,) and where additional or extended service is required in the interest of the public and a utility in the field makes known its willingness and ability to furnish the required service the Commerce Commission is not justified in granting a certificate of convenience and necessity to a competing utility until the utility in the field has had an opportunity to demonstrate its ability to give the required service, (Egyptian Transportation System v. Louisville and Nashville Railroad Co. 321 Ill. 580,) * * *."

A situation similar to that presented by the present case was involved in Illinois Power and Light Corp. v. Commerce Com. 320 Ill. 427, cited in the above paragraph, in that the area there in dispute was not within the territory actually certified to the existing utility, the Illinois Power and Light Corporation. We held there that this fact did not prevent the existing utility from making application for a certificate to serve other territory adjacent to one of its lines and that the principle favoring the prior utility in the field was equally applicable to such other territory. Similarly the property involved in this case has not actually been certified to Citizens Valley, but it is, as hereinbefore set forth, contiguous, except for highways, to other areas that have been certified to Citizens Valley.

"The first in the field" doctrine is not to be employed to totally prevent another from entering a contiguous area, or for that matter, even the same territory. (Eagle Bus Lines v. Commerce Commission, 3 Ill.2d 66.) The Public Utility Act itself, section 55, states that "no certificate of public convenience and necessity shall be construed as granting a monopoly or an exclusive privilege, immunity or franchise". Nevertheless, Citizens Valley, as the adjacent existing utility, would ...

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