Source: https://www.legalcrystal.com/case/98572/montana-dakota-utilities-co-vs-pub-serv
Timestamp: 2018-05-26 14:15:01
Document Index: 613637058

Matched Legal Cases: ['§ 9', '§ 9', '§ 309', '§ 210', '§ 307', '§ 825', '§ 309', '§ 825', '§ 205', '§ 824', '§ 313']

Montana Dakota Utilities Co Vs Pub Serv Co - Citation 98572 - Court Judgment | LegalCrystal
Montana-dakota Utilities Co. Vs. Pub. Serv. Co. - Court Judgment
LegalCrystal Citation legalcrystal.com/98572
Case Number 341 U.S. 246
Appellant Montana-dakota Utilities Co.
Respondent Pub. Serv. Co.
montana-dakota utilities co. v. pub. serv. co. - 341 u.s. 246 (1951) u.s. supreme court montana-dakota utilities co. v. pub. serv. co., 341 u.s. 246 (1951) montana-dakota utilities co. v. northwestern public service co. no. 77 argued november 27, 1950 decided may 7, 1951 341 u.s. 246 certiorari to the united states court of appeals for the eighth circuit syllabus petitioner and respondent are public utility electric companies engaged in interstate commerce and subject to the federal power act. for ten years, while under the same management through interlocking directorates and joint officers with the approval of the federal power commission, petitioner's predecessor and respondent interchanged electric energy,.....
Montana-Dakota Utilities Co. v. Pub. Serv. Co. - 341 U.S. 246 (1951)
U.S. Supreme Court Montana-Dakota Utilities Co. v. Pub. Serv. Co., 341 U.S. 246 (1951)
1. Since the complaint asserted a cause of action under the Federal Power Act, the District Court had jurisdiction to determine whether it stated a cause of action maintainable in a federal court and, if so, whether it was sustained on the facts. P. 341 U. S. 249 .
2. The complaint stated no cause of action maintainable in a federal court. Pp. 341 U. S. 249 -255.
(a) Under the Federal Power Act, the right to a reasonable rate is the right to the rate which the Commission files or fixes, and, except for review of the Commission's orders, a court can assume no right to a different rate on the ground that, in the opinion of the court, such different rate is the only reasonable rate or a more reasonable rate. Pp. 341 U. S. 250 -252.
(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.
(c) Since the Federal Power Act does not authorize the Commission to grant reparations for unreasonable rates collected in the past, the District Court could not properly refer the case to the Commission for determination of the reasonableness of the rates here involved. Pp. 341 U. S. 253 -254.
3. Since the case involves only issues which a federal court cannot decide, and can only refer to a body which also would have no independent jurisdiction to decide them, the complaint must be dismissed. P. 341 U. S. 255 .
In a suit alleged to be founded on the Federal Power Act, the District Court awarded petitioner a judgment for losses sustained on past rates and charges which the District Court found to be unreasonable and based on fraud. The Court of Appeals reversed on the ground that the District Court was without jurisdiction. 181 F.2d 19. This Court granted certiorari. 340 U.S. 806. Affirmed on a different ground, p. 341 U. S. 255 .
During that relationship, the two interchanged electric energy, shared expenses, and made a number of intercompany contracts establishing rates and charges, which contracts were filed with and accepted by the Federal Power Commission. These contract rates and charges are at the root of this controversy. Petitioner charges that, during the period 1935-1945, its predecessor paid respondent unreasonably high prices for what respondent furnished it, and that it received unreasonably low rates for what it provided respondent. That advantage, it is alleged, was fraudulent and unlawful, and was due to the interlocking directorate, which prevented protest to the Commission to have reasonable rates and charges established pursuant to the provisions of the Federal Power Act. [ Footnote 1 ]
Petitioner sued in United States District Court and asserted jurisdiction on the ground that the case "arises under the Constitution, or laws of the United States," [ Footnote 2 ] and, more particularly, under a "law regulating commerce," [ Footnote 3 ] specifically the Federal Power Act.
Petitioner was successful in the District Court, which found the contracts void for fraud and the rates and charges established therein unreasonable. The court also determined what would have been reasonable rates and charges for the period in question, and gave judgment for the difference between its conception of reasonable charges and the actual charges, amounting to over three-quarters of a million dollars. [ Footnote 4 ]
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 ]
The Fair v. Kohler Die & Specialty Co., 228 U. S. 22 , 228 U. S. 25 . See also Hurn v. Oursler, 289 U. S. 238 , 289 U. S. 240 . Even a patently frivolous complaint might be sufficient to confer power to make a final decision that it is of that nature, binding as res judicata on the parties.
Petitioner identifies as the source of its cause of action the Federal Power Act's requirement of reasonable electric utility rates, [ Footnote 6 ] which, it contends, creates its legal right to rates which a court may deem reasonable, even if different from those accepted by the Federal Power Commission. It is admitted, however, that a utility could not institute a suit in a federal court to recover a portion of past rates which it simply alleges were unreasonable. It would be out of court for failure to exhaust administrative remedies, for, at any time in the past, it could have applied for and secured a review and, perhaps, a reduction of the rates by the Commission. [ Footnote 7 ]
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
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
If the court is presented with a case it can decide, but some issue is within the competence of an administrative body, in an independent proceeding, to decide, comity and avoidance of conflict as well as other considerations make it proper to refer that issue. But we know of no case where the court has ordered reference of an issue which the administrative body would not itself have jurisdiction to determine in a proceeding for that purpose. The fact that the Congress withheld from the Commission power to grant reparations [ Footnote 9 ] does not require courts to entertain proceedings they cannot themselves decide in order indirectly to obtain Commission action which Congress did not allow to be taken directly. There is no indication in the Power Act that that was Congress' intent.
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 ]
Myers v. Bethlehem Shipbuilding Corp., 303 U. S. 41 , 303 U. S. 50 -51. This principle is particularly relevant to rate regulation. Texas & Pac. R. Co. v. Abilene Cotton Oil Co., 204 U. S. 426 ; Mitchell Coal & Coke Co. v. Pennsylvania R. Co., 230 U. S. 247 ; Armour & Co. v. Alton R. Co., 312 U. S. 195 . Compare Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285 .
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
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
Firemen and Enginemen, 323 U. S. 210 ; cf. De Lima v. Bidwell, 182 U. S. 1 .
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.
To leave relief to the diverse and conflicting State law dealing with intercorporate relations would make for conflicting local administration of an important national problem. This Court has recently shown marked reluctance to leave to the States determination of even State law questions involved in the administration of the Federal Power Act. First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 328 U. S. 152 . What is involved here -- the frustration, by misuse of the machinery of the Federal Power Act, of the command of Congress that rates be reasonable -- has a federal character and significance. We do not think it likely that Congress intended that there should be no relief for this kind of tampering with the federal regulatory scheme other than that which might be afforded by the corporation law of the forty-eight States.
recently emphasized the principle that courts and agencies "are to be deemed collaborative instrumentalities of justice." United States v. Morgan, 313 U. S. 409 , 313 U. S. 422 , 307 U. S. 307 U.S. 183; Palmer v. Massachusetts, 308 U. S. 79 . To that end, it is established practice that courts may entertain actions brought before them, but call to their aid the appropriate administrative agency on questions within its administrative competence. See Smith v. Hoboken R. Co., 328 U. S. 123 ; Thompson v. Texas Mexican R. Co., 328 U. S. 134 ; cf. United States Alkali Export Assn. v. United States, 325 U. S. 196 , 325 U. S. 210 . In the El Dorado Oil Works litigation, we held that proper procedure required the District Court to entertain a suit on a contract, but to look to the Interstate Commerce Commission for guidance as to transportation practices involved in carrying out the contract. General American Tank Car Corp. v. El Dorado Terminal Co., 308 U. S. 422 , 308 U. S. 433 ; El Dorado Oil Works v. United States, 328 U. S. 12 . The fact that the Federal Power Commission is not itself authorized to award damages does not disable it from advising a court on questions on which its judgment is needed. See United States v. Morgan, supra; Atlantic Coast Line R. Co. v. Florida, supra, at 295 U. S. 312 . We see no reason why the Commission's findings should not be sought here.
in view of all relevant circumstances, be considered "reasonable" rates. It also falls to the Commission to decide what would have been the reasonable rates. The opinion of the Commission, being "only a preliminary, interim step" towards final judgment, would not be a reviewable order under § 313(b) of the Act, but would be reviewed only as a part of the judgment entered by the district court. Federal Power Comm'n v. Hope Natural Gas Co., 320 U. S. 591 , 320 U. S. 618 -619.
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.