It includes the costs which are not included in the structural value, the cost of getting customers and all items entering into making the company a going concern and a profit-making institution. The going concern value very materially depends upon the success of the business and the property. It is apparent from the foregoing that the witness had already testified to a valuation based upon the earning capacity of the plant in his going concern value, although, having adopted an arbitrary rule of percentages in arriving at that going concern value, the witness may not have been aware of that fact, as he had based his percentage allowance upon a large number of cases which he cited wherein the going concern value allowed by public utility commissions and courts have varied from 12 to 30 per cent.
It tended to confuse the issue before the jury by submitting to it as distinct elements of damage a going concern value which necessarily involved earning capacity and the same earning capacity in the form of franchise value or severance damage.
The ruling of the trial court was correct. But this offer must be read in light of the testimony of the witness to the effect that he ascertained the value of the franchise or the severance value by the method indicated, which was not a proper way to estimate such value. Later, appellants, through their witness W.
The witness was asked the following questions:. McGrath, in your opinion what loss will the whole system of the company suffer, now you need not answer this until counsel has objected, I will withdraw that part of the question and repeat again.
McGrath, in your opinion, what loss will the entire system of the company suffer by reason of having severed from it this plant from its market for 1, kilowatts?
The answer to that question is, I take it, in dollars? No, what would be the effect upon the whole system of the company including its general system? Well, the effect in the first place is that we would lose the profits from that business. We are in business to make money.
We have a market in Puyallup for the next 25 years by contract with the city. The removal of that market from our system removes the profits for the next 25 years. Appellee moved to strike out this answer on the ground that loss of profits was not an element of the matter, and the motion was granted and exception taken. The court, in its ruling, made the following statement:. It is the duty of the court to keep the issues submitted to the jury as simple as possible.
Now, the witness has said that they have got a contract with the city for 25 years and that by this proceeding you are going to lose that profit. Well, the court does not care to enter into a thesis with the jury as to that contract which the company may have with the city being at all times subject to a condemnation proceeding.
The matter for the jury to consider is the physical value of the property taken and the use that is being made of that property by the company in its business. The profits they are making is something bearing on that value, but it is not necessary to wholly protect you in the full and fair value of your property that the witness stress this loss. What the city is taking is your property and the value of that property is to be determined among other things by the use you are making of it, and the profitable use you are making of it.
In considering the propriety of the ruling of the court, it should be stated that the witness had testified to the market value of the property taken, and had arrived at that value by multiplying the gross earnings by four or the net earnings by eleven.
He testified: "Having obtained all these reports and studies by experts as to the values of the property, the cost of reproduction, less depreciation, the statement of what the property is doing in the way of gross earnings, what its operating expenses are, what the net earnings are and what the future prospects are, there are several yardsticks available to measure your market value.
In case of electric light and power properties the yardstick usually used is not less than four times the gross earnings and not less than ten or eleven times the net earnings.
By net earnings I mean the difference between the gross earnings and the operating expenses and taxes. By operating expenses I mean the cost of power. In view of the fact that the witness testified fully as to the capitalization of the profits derived from Puyallup system, it was not proper for him to again capitalize the same earning capacity under the name of "severance damages. The witnesses on both sides were fully advised by their experience and by the rulings of the court that they were permitted to take into consideration the earning capacity of appellants' property in determining its market value; that this earning capacity was something in addition to the value of the tangible property sought to be taken.
It must have been clear to the witnesses who testified as to the market value of the property sought to be condemned that the taking over of this property by the city would necessarily appropriate the franchise, and that the right of the appellant to operate as a going concern was entirely dependent upon the franchise, and they evidently considered that fact in fixing the market value.
We may assume that there is a difference between going concern value, as it is arrived at in rate-making cases, and the market value of a franchise to be fixed in the condemnation proceedings. A condemnation case necessarily involves ascertainment of the market value of the right of the public utility to continue to operate as such and to derive such future income therefrom as is foreshadowed by the fact that it is operating the property as a going concern, and has a large number of present, and a larger number of prospective, customers, by whatever name we may call that right.
A critical analysis of the distinction between the franchise value and going concern value as presented in the two types of cases is entirely unnecessary in the case at bar. It would perhaps have been better for the parties, after qualifying their witnesses, to have merely asked the basic questions, "What is the market value of the property taken?
In such case no doubt the same questions would come up on direct and cross examination, for, if it appeared either on direct or cross examination that the witness had pursued a wholly unwarranted course in arriving at his estimate of value, it would be necessary to make correction thereof either by striking out his estimate of the market value or by instructing the jury to disregard that portion of the value due to the erroneous method.
Appellants' next point is as follows: "Appellee's attorneys had no right to eliminate from the proceedings certain items of property which were included in and covered by the language of the city ordinance authorizing condemnation. The language of the ordinance was very general in its terms, and the description therein does not specifically indicate the items to be taken. Such plants and facilities to be so acquired, consist of a substation, transformers, switches, motors, meters, machinery and equipment, distribution lines, poles, wires, lamps and all appurtenances and accessories, and all contracts, franchises, rights and privileges necessary and convenient for the distribution of such electricity or relating thereto.
The itemizing of the property was accomplished by a detailed statement furnished by the appellee to the appellants. The specific ruling assigned as error is the sustaining by the trial court of an objection by the appellee to proof of the value of certain transformers temporarily installed at the fair grounds within the city for use during the fair. It is stated in the objection that these transformers were used only once a year, being moved in and out during the week of the fair in September under arrangements between the fair association and the company, "and we filed a disclaimer of any intention to take them.
They are used probably a week or two or ten days by the fair association, and by the company the rest of the year elsewhere. The trial court was justified under the evidence in concluding that these transformers did not come within the terms of the ordinance which applied to existing works and facilities in the city.
The ordinance directing the institution of condemnation proceedings was passed July 3, The election authorizing the condemnation and approving a bond issue therefor was held March 12, The argument advanced in the brief in support of the contention of the appellants is that neither court nor counsel had a right to interpret "the ordinance as excluding the foregoing item.
Certainly appellants cannot complain that their property was not taken from them by condemnation proceedings where they were awarded any damages resulting to the property not taken because of its severance from that which was taken. The question arose during the trial in this way: Mr. On cross-examination he gave the items in a somewhat different form. He had also stated in estimating the damages to the company by reason of the taking away of the Puyallup property and considering the amount of damage by reason of the severance or by reason of the fact that the company would lose so much business:.
The Puget Sound Company is the logical company for supplying the city of Puyallup. On redirect examination appellee asked this witness: "Now, Mr. Towne, getting back to this severance again, as to whether or not the earnings of the company, the remaining property after the severance, I will ask you whether or not you considered the probability of the company keeping on selling to Puyallup in arriving at whether or not there would be any severance loss to the company by reason of loss of business?
This was objected to on the ground it was irrelevant, incompetent, and immaterial and not proper in this case. The objection was overruled. Inasmuch as this evidence had already been adduced without objection, appellants cannot take advantage of this ruling. The ruling of the court on this subject was again invoked by motion to strike out testimony already adduced upon this subject. The motion, however, did not specifically indicate the questions and answers to be stricken out; moreover, as we have already pointed out, some of this evidence was introduced without objection.
The motion was properly denied, for the reason that it was too general. The court, in allowing an exception to this ruling, stated as follows:. Exception allowed. The jury will understand that you are not to speculate. It amounts to showing you that the city is not tied up in any way to keep it from being a customer; that it would be in the market to purchase power such as the company furnishes.
I see no other bearing it has in the case. Thereupon counsel specified the same grounds of exception stated in the motion to strike out the testimony.
The court, in its final instructions to the jury upon this subject, stated: "You are not to take into consideration in arriving at your verdict, as a reason to lessen the owner's compensation for property taken, the fact that the city of Puyallup, after it acquires the electrical distribution system of the defendant Puyallup, may purchase from the defendant electrical current for such distribution system.
No exception was taken to this instruction, and it was more favorable to the appellants than they were entitled to. As we have stated, in severance damages an element to be considered is the depreciation of the market value of the balance of the plant by reason of the severance of the unit taken.
A purchaser of such a plant would undoubtedly take into consideration the fact that there would be an opportunity to sell power to the city of Puyallup.
This would be true regardless of the legal obstacles which might be interposed at the outset to the purchase of such power under then existing conditions.
In other words, the question is, What would the purchaser and seller consider in fixing the market price of the property? The rule invoked by appellants in support of their position is thus stated in its brief: "The rule in eminent domain cases is that the damages cannot be reduced or mitigated by any consideration of future advantage to the owner which the condemnor is not under any obligation to concede; and evidence based on such claimed advantage is inadmissible.
See: 20 C. Appellants' next point is thus stated: "The trial court erred in allowing testimony that appellants would suffer no substantial severance damage because, by the growth of new business on other plants, appellants would soon make up the loss, and in denying appellants the right to cross-examine a witness who had so testified.
Appellee's witness, Homer Blair, testified with reference to severance damage as follows: "I figure the severance damages to be the cost of making the necessary changes. He explained the proposed changes, and stated in response to a question that this constituted all the severance damages that he had allowed in his estimate.
He further testified:. I did not make any allowance of damage on that account for the reason that the load into Puyallup is so small compared with the entire system that it would be just a few days before they would catch up.
The load at Puyallup is really about one per cent of the company's entire load. The average idle period of generating capacity, therefore, in my opinion would be about ten days.
In my opinion there is no such damage. There will not result any loss of usefulness or any idle capacity upon the 55, K. The expense of serving territory outside of Puyallup will not be increased after the severance over what it is in the present system.
It will be observed that the witness is giving the basis upon which he arrived at his severance damage. It is certainly proper for him to explain, not only that he considered certain elements as making up the total of such damage, but that he omitted therefrom the damage to the business of the appellants due to the severance of the property taken, because in his opinion there was no such damage. The rulings of the trial court in permitting this testimony are proper.
The question propounded on cross-examination, to which objection was sustained, is as follows: "But they have lost apparently a thousand kilowatts, haven't they? It is not altogether clear what was intended by the question, and there was no error in the ruling, particularly in view of the fact that the witness had stated on direct examination the fact that the question was calculated to draw out as follows: "You are taking away about 1, kilowatts of the company's load.
That is in the neighborhood of one-half of one per cent of their peak system load at the present time. They are going at 34, kilowatts in addition to their peak according to the report filed at Olympia that I checked, so that 1, kilowatts represents about two weeks normal increase in their system load.
That is, it would be so short a time before the load now in Puyallup would be made up by natural increase that it is hardly worth considering. The question of idle capacity brings into it the fact that last year on the peak, which is the time when the capacity is needed, they did not have enough capacity to continue to serve all their customers. The normal growth would take care of the entire load in Puyallup that they are losing in two weeks.
There would be an average of one week's loss, assuming that the City of Puyallup did not buy their energy to operate the distribution system when they take it over. It was a conceded fact in the case that the city of Puyallup was using about 1, kilowatts of electrical energy, so that there is no point to the particular question for the court to rule upon.
At any time until the city has paid the just compensation to be determined by you and procured the entry of a decree of appropriation, the city can abandon this proceeding. Seller does not accept returns See details. See payment details. Special financing available. Any international shipping and import charges are paid in part to Pitney Bowes Inc.
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