Source: https://www.chanrobles.com/usa/us_supremecourt/341/246/case.php
Timestamp: 2020-08-09 20:03:22
Document Index: 196873122

Matched Legal Cases: ['§ 305', '§ 825', '§ 205', '§ 824', '§ 205', '§ 824', '§ 9', '§ 9', '§ 309', '§ 210', '§ 307', '§ 825', '§ 309', '§ 825', '§ 205', '§ 824']

(b) In the absence of diversity of citizenship, the allegation of fraud resulting from the interlocking relationship did not state a cause of action maintainable in a federal court. Pp. 341 U. S. 252-253. chanrobles.com-red
Petitioner and respondent are public electric utilities companies engaged in interstate commerce. Petitioner's predecessor and respondent were under the same management through interlocking directorships and joint officers. chanrobles.com-red
The judgment was reversed by the Court of Appeals for the Eighth Circuit on the ground that the District Court was without jurisdiction. [Footnote 5] chanrobles.com-red
However, it is clear that the reason underlying the Court of Appeals' decision was that no federal cause of action was established. If this was correct, we should sustain chanrobles.com-red
Petitioner gives its case a different cast by alleging that, by fraudulent abuse of the interlocking relationship, chanrobles.com-red
We hold that the right to a reasonable rate is the right to the rate which the Commission files or fixes, and that, chanrobles.com-red
But petitioner's case appears to have rested more heavily, and perhaps entirely, on constructive fraud presumed from the intercorporate relationship. The Act vests in the Commission power to authorize an interlocking directorate, which otherwise is prohibited, "upon due showing . . . that neither public nor private interests will be adversely affected thereby." [Footnote 8] The relationship here concerned had received Commission approval. The effect of the approval is to exempt the relationship from the ban of the Act and remove from it any presumption of fraud that might be thought to arise from its mere chanrobles.com-red
It is true that, in some cases, the Court has directed lower federal courts to stay their hands pending reference to an administrative body of a subsidiary question. Smith v. Hoboken R. Co., 328 U. S. 123; Thompson v. Texas Mexican R. Co., 328 U. S. 134; General American Tank Car Corp. v. El Dorado Terminal Co., 308 U. S. 422. But, in all those cases, the plaintiff below concededly stated a federally cognizable cause of action, to which the referred issue was subsidiary. In no instance have we directed a court to retain a case in which it could not determine a single one of its vital issues. Here, the issue of reasonableness of the charges is not one clearly severable from the issues of liability, for the acts charged do not amount to chanrobles.com-red
It is urged that this leaves petitioner without a remedy under the Power Act. We agree. In that respect, petitioner is no worse off after losing its lawsuit than its customers are if it wins. Unless we are to assume that this company failed to include its buying costs in its selling rates, we must assume that any unreasonable amounts it paid suppliers it collected from consumers. Indeed, this is the assumption made by the Commission in its brief as amicus curiae here. [Footnote 10] It is admitted that, if it recoups again what it has already recouped from the public, there is no machinery in or out of court by which others who have paid unreasonable charges to it can recover. [Footnote 11] chanrobles.com-red
After January 1, 1935, all but one of Montana-Dakota's directors were directors of Northwestern, and all of Montana-Dakota's officers were officers of the other company. These interlocking arrangements received formal authorization by the Federal Power Commission, as required by § 305(b) of the Act. 16 U.S.C. § 825d(b). At different times between 1935 and 1945, contracts were made between the two corporations for the sale of electric energy. All such agreements have to be filed with the Commission, § 205(c), 16 U.S.C. § 824d(c), but the legality of rates so filed is not conditioned upon the Commission's chanrobles.com-red
The Court of Appeals for the Eighth Circuit reversed. It held that the Federal Power Commission "had jurisdiction and was the proper tribunal in the first instance" to determine the reasonableness of the rates and the bearing of fraud practiced on the Commission in securing permission for the interlocking arrangements and the resulting subversion of rights under the Federal Power Act. The court found that "The Commission can, no doubt, correct its own mistakes," but it did not specify chanrobles.com-red
§ 205(a), 49 Stat. 851, 16 U.S.C. § 824d(a). We face at the outset the contention that this section confers on the Federal Power Commission authority to award reparations for unreasonable rates collected in the chanrobles.com-red
The Court of Appeals apparently closed the door of the District Court to this suit on the assumption that relief could be had from the Federal Power Commission for the damage flowing from violation of the Federal Power Act. Of course, a court would not grant relief, at least in the chanrobles.com-red
But we do not find that the Federal Power Act provides administrative remedies to meet the situation before us. We have seen that that Act does not authorize the Commission to award reparations to those subjected to unreasonable rates. The Act likewise does not afford to the Commission the authority conferred on administrative agencies under other regulatory statutes to award damages to those injured by violations of the Act. Compare Act of February 4, 1887, § 9, 24 Stat. 382, 49 U.S.C. § 9; Act of August 15, 1921, § 309(e), 42 Stat. 166, 7 U.S.C. § 210(e). The Power Act, it is true, does give the Commission authority to look into past rates in order to determine whether the Act has been violated. § 307(a), 49 Stat. 856, 16 U.S.C. § 825f(a). See Atlantic Coast Line R. Co. v. Florida, 295 U. S. 301, 295 U. S. 312. But such an inquiry cannot be made the basis for an administrative award of damages to the victims of the violations. Again, the Commission may, as the Government suggests, have power under the omnibus provisions of § 309 to vacate its approval of a rate when approval has been obtained by fraud. 49 Stat. 858, 16 U.S.C. § 825h. But this does not authorize the Commission to fix rate orders retrospectively. The Commission may establish rates only chanrobles.com-red
But we cannot agree that the inability of the Federal Power Commission to grant relief requires that courts be similarly disabled. Courts, unlike administrative agencies, are organs with historic antecedents which bring with them well defined powers. They do not require explicit statutory authorization for familiar remedies to enforce statutory obligations. Texas & N.O. R. Co. v. Brotherhood of Clerks, 281 U. S. 548; Virginian R. Co. v. System Federation,, 300 U. S. 515; Deckert v. Independence Shares Corp., 311 U. S. 282. A duty declared by Congress does not evaporate for want of a formulated sanction. When Congress has "left the matter at large for judicial determination," our function is to decide what remedies are appropriate in the light of the statutory language and purpose and of the traditional modes by which courts compel performance of legal obligations. See Board of Comm'rs v. United States, 308 U. S. 343, 308 U. S. 351. If civil liability is appropriate to effectuate the purposes of a statute, courts are not denied this traditional remedy because it is not specifically authorized. Texas & Pac. R. Co. v. Rigsby, 241 U. S. 33; Steele v. Louisville & N. R. Co., 323 U. S. 192; Tunstall v. Brotherhood of Locomotive chanrobles.com-red
The Power Act is explicit that any "rate or charge that is not just and reasonable is hereby declared to be unlawful." § 205(a), 49 Stat. 851, 16 U.S.C. § 824d(a). The aim of Congress would be needlessly aborted if this "definite statutory prohibition of conduct" did not impose civil liability in a situation not covered by administrative remedies merely because no judicial relief was explicitly authorized. Compare Texas & N.O. R. Co. v. Brotherhood of Clerks, supra, at 281 U. S. 568. The right of civil recovery by persons compelled to pay unreasonable or discriminatory rates to common carriers is one of the oldest forms of relief in our law. Western Union Tel. Co. v. Call Publishing Co., 181 U. S. 92. To enforce a remedy for collection of unreasonable charges in the situation before us, therefore, would recognize deeply rooted law; to deny it would be inconsistent with long established judicial practice. The experience of the Commission indicates that the statute itself, by virtue of the positive duties it commands, under normal circumstances is very largely its own sanction. [Footnote 2/1] Want of explicitness in providing a familiar remedy for the rare case of disobedience should not be construed a denial of it. chanrobles.com-red
Nor will it transfer to the courts responsibility for deciding questions which should properly be presented to the Power Commission. In a variety of situations we have chanrobles.com-red
We think, therefore, that a cause of action within the jurisdiction of the district courts is stated by a complaint charging a distributor of electric energy at wholesale in interstate commerce (1) with buying or selling at unreasonable rates, (2) with failure to comply with procedural requirements of the Federal Power Act, and (3) with preventing others from resorting to the remedies afforded by that Act. In such cases, the district court should stay proceedings and request determination by the Federal Power Commission of matters within the Commission's special competence. It is within the Commission's domain to rule whether filed rates should not, chanrobles.com-red
The objections raised to this procedure have apparently not been considered substantial by the Federal Power Commission, the body primarily charged with administration of the Act. [Footnote 2/2] We do not think they should prevail. The function of the District Court is not simply to serve as a facade behind which the Commission is enabled to accomplish indirectly what it cannot do directly. Certain issues of fact -- the completeness of disclosure, for instance, or the loyalties of the directors -- are properly for the court. Action by the court may similarly be required in determining the appropriate disposition of the fund. See Federal Power Comm'n v. Interstate Natural Gas Co., 336 U. S. 577; Interstate Natural Gas Co. v. Federal Power Comm'n, 181 F.2d 833. Recovery by Montana-Dakota need not be a windfall to that company. Many changes in costs charged utilities are not reflected in prices they may collect. Compare St. Louis & O'Fallon R. Co. v. United States, 279 U. S. 461, 279 U. S. 488, 279 U. S. 505-509 (Mr. Justice Brandeis, dissenting). To the extent that Montana-Dakota has passed on its loss to its customers, they may be permitted recovery from it on well established principles of unjust enrichment. And even if the effect of awarding relief is ultimately to benefit Montana-Dakota, it certainly has a better claim to the exacted funds than Northwestern. chanrobles.com-red