Case Name: Citizens Gas & Coke Utility, etc., et al. v. Sloan et al.
Court: Appellate Court of Indiana
Jurisdiction: Indiana
Decision Date: 1964-02-19
Citations: 136 Ind. App. 297
Docket Number: No. 19,928
Parties: Citizens Gas & Coke Utility, etc., et al. v. Sloan et al.
Judges: Carson, C. J., Hunter, P. J., Kelley and Ryan, JJ., concur.
Reporter: Indiana Court of Appeals Reports
Volume: 136
Pages: 297–320

Head Matter:
Citizens Gas & Coke Utility, etc., et al. v. Sloan et al.
[No. 19,928.
Filed February 19, 1964.
Rehearing denied April 6, 1964. Motion to reconsider dismissed April 20, 1964. Transfer denied July 2, 1964. Motion to reconsider dismissed August 1, 1964.]
Harry T. Ice, Robert D. Risch, Ross, McCord, lee & Miller, of counsel, Patrick J. Smith, Marvin L. Hackman, James E. Hawes, Jr., James R. McClarnon, and Thompson, O’Neal & Smith, of counsel, all of Indianapolis, for appellants.
Gustav H. Dongus, Arthur H. Gemmer, Fauvre, Dongus, Ging & Gemmer, Harry T. Latham and Key, Latham & Strawbridge, of Indianapolis, for individual appellees, Robert Sloan and others.
Edwin K. Steers, Attorney General, Marcus Woods, Deputy Attorney General, and Fred A. Jewell, of Worthington, for appellee, Public Service Commission.

Opinion:
Mote, J.
This action was commenced when appellees, owners of real estate in the Worthington Gas Storage Field in Greene County, Indiana, filed a complaint in the nature of a petition with the Public Service Commission of Indiana.
The complaint named as respondents, appellants herein, the following entities: (1), Citizens Gas & Coke Utility, which is a utility district and instrumentality of the City of Indianapolis, Indiana, (2), seven named individuals joined as members of, and constituting the Board of Directors of Utilities of the City of Indianapolis, and (3), Citizens By-Products Coal Company, a West Virginia corporation which is admitted to do business in Indiana and which is wholly owned by Citizens Gas & Coke Utility.
The appellants moved to dismiss the complaint on the ground, among others, that the Public Service Commission is without jurisdiction "either of the subject matter or the person of any of the respondents", since a municipal utility rather than a public utility is involved herein.
The Commission overruled the motion to dismiss and on July 20, 1962, entered an order stating that the Commission did have jurisdiction. It based its order on the premise that the allegation that appellants were furnishing gas to inhabitants of Greene County alone was sufficient to give the Commission authority to undertake an investigation.
Appellants petitioned for a rehearing and appellees moved to strike the petition. The Commission overruled both the petition and the motion. Appellants then instituted this proceeding for review and assigned as error, (1), the Commission's overruling of the appellants' motion to dismiss, (2), the assertion of jurisdiction by the Commission, and (3) that the Commission's ruling is contrary to law, all of which are prejudicial to appellants, who also ask this Court permanently to enjoin the enforcement of the order.
A motion to dismiss the action in this Court has been filed by part of the appellees. The contention, asserted in support of dismissal, is that the action is premature since (1) the order complained of is not a final order, and (2) the order, since it is procedural only, does not adversely affect appellants.
Appellants, on the other hand, contend that such an attack may be made at any time, since the issue of jurisdiction is subject to judicial review at any timé.
At the outset, therefore, we are faced with the following question: May the jurisdiction of the Public Service Commission of Indiana be challenged in our courts by a party who does not first exhaust his administrative remedies?
Indiana courts have held that the issue of jurisdiction over the subject matter may be raised at any stage of the proceedings. See Board of Commissioners of the County of Marion v. Jewett (1915), 184 Ind. 63, 110 N. E. 553. The question of whether judicial relief may be obtained without exhausting administrative remedies is different, howevér, and has been subject to great diversity of opinion in' this country. The United States Supreme Court, in the case of Petroleum Exploration, Inc. v. Public Service Commission (1938), 304 U. S. 209, 58 S. Ct. 834, 82 L. Ed. 1294, refused to enjoin a hearing of the Kentucky Public Service Commission. The Kentucky Commission had issued an order asserting its jurisdiction over the appellant and ordering the appellant to present evidence at a public hearing and also to make its records available for examination. The injunction was refused, since there was no showing of irreparable injury, other than expense of litigation which was said to be insufficient reason to interfere with the administrative proceedings.
The contrary view was taken in Public Utilities Commission of Ohio v. United Fuel Gas Co. (1943), 317 U. S. 456, 63 S. Ct. 369, 87 L. Ed. 396. The same issue faced the court; however, exhaustion of administrative remedies was not required and the court decided the case on its merits.
Other cases in the United States Supreme Court are similarly divided. See Allen v. Grand Central Aircraft Co. (1954), 347 U. S. 535, 74 S. Ct. 745, 98 L. Ed. 933; Franklin v. Jonco Aircraft Corp. (1953), 346 U. S. 868, 74 S. Ct. 126, 98 L. Ed. 378.
Cases in other states fluctuate as to the requirement of exhaustion of administrative remedies when the jurisdiction of the agency is challenged. Some courts refuse judicial review until all administrative remedies have been exhausted. See Abelleira et al. v. District Court of Appeal (1941), 17 Cal. 2d 280, 109 P. 2d 942, 132 A. L. R. 715; United States v. Superior Court (1941), 19 Cal. 2d 189, 120 P. 2d 26; Stoddard v. Public Utilities Commission (1941), 137 Me. 320, 19 A. 2d 427; Brass Rail Restaurant Co. v. Pennsylvania Labor Relations Board (1953), 375 Pa. 213, 100 A. 2d 80. Other cases allow the jurisdiction of the agency to be challenged without exhausting administrative remedies. St Luke's Hospital v. Labor Relations Commission (1946), 320 Mass. 467, 70 N. E. 2d 10. A few states take a modified approach and allow jurisdiction to be challenged without exhaustion of administrative proceedings if the question is one of law and not of fact. Idaho Mut. Ben. Ass'n. v. Robison (1944), 65 Idaho 793, 154 P. 2d 156; or if it would appear to be of no avail to pursue the administrative remedies. Kirn v. Noyes (1941), 262 App. Div. 581, 31 N. Y. S. 2d 90; or if irreparable harm is shown. See Thomas v. Ramberg (1953), 240 Minn. 1, 60 N. W. 2d 18.
Indiana has held that an assertion of jurisdiction by the Public Service Commission is an initial and integral step in a regulatory scheme and such an order is immediately subject to judicial review. Boone County Rural Electric Membership Corporation, et al. v. Public Service Commission of Indiana (1958), 129 Ind. App. 175, 155 N. E. 2d 149.
In view of this, we think the application to this Court for judicial review is not premature; therefore, we come to the only other question presented herein.
The complaint before the Public Service Commission alleged, among other things, that since the year 1959, and thereafter, appellant, Citizens Gas & Coke Utility, has drilled twenty-three (23) wells in the Worthington Gas Storage field, hired a research corporation to determine the amount of natural gas in place, represented to appellees and other Green County property owners that said Citizens Gas & Coke Utility would exercise its power of eminent domain as to those owners who would not voluntarily enter into leases; that said utility would render gas service to said Greene County property owners; and that said utility is not subject to Greene County taxes; that Citizens Gas & Coke Utility, directly or otherwise, entered into purported leases with appellees by which the appellant contracted to pay less than the full market value of natural gas in place and to pay an annual lease rental which is also far less than the reasonable market value of the land for gas storage purposes; that said appellant assigned the leases and operation of the Worthington Gas Storage field to appellant, Citizens By-Products Coal Company, a wholly owned subsidiary of appellant, Citizens Gas & Coke Utility; that said appellants furnish gas service to inhabitants of Greene County, Indiana, which is approximately sixty-five (65) miles from the utility district of Citizens Gas & Coke Utility.
The prayer for relief asked the Commission to undertake an investigation of the alleged operations, declare the operations to be in violation of the Public Service Commission Act of Indiana, declare the said leases void, order appellants to cease and desist from said operations, and to institute legal action through the Attorney General's Office for collection of statutory penalties and to grant all other proper relief.
The Commission asserted its jurisdiction in its order which, omitting formal parts, reads as follows:
"Having read and examined the petition, having read and considered briefs filed by counsel, and having heard the oral argument of counsel and being duly advised in. the premises, the Commission now finds:
1. That the Motion to Dismiss filed by Respondents, Citizens Gas & Coke Utility et al., of February 21, 1962, states in two of its paragraphs the basis of said motion, and we quote: '2. This Commission does not have jurisdiction of either the subject matter or the person of any of the Respondents. Since Respondents operate as a municipal utility and not as a public utility, this Commission has no jurisdiction or power to conduct the investigation or grant any of the relief requested by Complainants. 3. The complaint of Complainants does not allege facts upon which any of the relief requested by Complainants might property be granted.'
2. That there is no question but that the Commission's jurisdiction over the Respondent, a municipal utility, is not the same as its jurisdiction over a public utility; that the primary statute upon which jurisdiction of the Commission would be determined is 48-7101 et seq;, Burns' Indiana Statutes, Annotated; that said Acts do state certain areas in which the Commission would have jurisdiction over Citizens Gas & Coke Utility; that the parties do not cite nor is the Commission able to determine any previous Indiana decisions or any constitutional or legislative provisions with respect to the jurisdiction of the Public Service Commission over extraterritorial service on the part of a municipal utility; and, therefore, this is a matter of first impression in Indiana.
3. That the Motion to Dismiss filed in this cause is in the nature of a demurrer to a complaint; and, therefore, the Commission must accept the allegations set forth in the Complaint of January 30, 1962.
"as true; that among said allegations, we find on Page 6 of the Complaint, Rhetorical Paragraph '7. (f) Furnished gas service to inhabitants of Greene County'; that this allegation alone, if proven, would give this Commission authority to grant the relief prayed for in Paragraph (a) of the prayer of Complainants, that is, to undertake an investigation; that the Commission need not consider at this time the other questions raised by the pleadings or briefs.
"It is a fundamental principle of law that every Commission of Indiana that the Motion to Dismiss filed by the Respondents in this cause be, and it is hereby denied; that this cause be set down for hearing by the Commission."
Appellant contends that since it is a municipal utility the Public Service Commission has no jurisdiction over it, under any circumstances. The Public Service Commission is a creature of statute and its jurisdiction is derived therefrom. In the case of Boone County REMC et al. v. Public Service Commission, supra, it was said:
"It is a fundamental principle of law that every administrative agency of the state of Indiana must find the source of its authority in the statute conferring it, and it can only exercise the power conferred in conformity with the statute. See State Board Tax Comm. v. McDaniel (1928), 199 Ind. 708, 160 N. E. 347; State ex rel. v. Clamme (1922), (T. D. 1923), 80 Ind. App. 147, 134 N. E. 676.
"Both the Supreme Court and our court have held that the Commission derives its authority from the statutes and possesses only such power as is conferred by statutes. See Chicago & E. I. R. Co. v. Public Service Comm. (1943), 221 Ind. 592, 49 N. E. 2d 341; State ex rel. v. Vandalia R. Co. (1915), 183 Ind. 49, 108 N. E. 97; American Foundry Co. v. C. I. & L. R. R. Co. (1931) (T. D. 1934), 100 Ind. App. 111, 178 N. E. 295."
We must therefore look to the statutes from which the Commission derives its authority. In §54-105, Burns' 1951 Replacement (1963 Supp.) we find the following:
"Definition of terms — Short title of act. — The term 'public utility' as used in this act shall mean and embrace every corporation, company, individual, association of individuals, their lessees, trustees, or receivers appointed by any court whatsoever, that now or hereafter may own, operate, manage or control any street railway or interurban railway or any plant or equipment within the state for the conveyance of telegraph or telephone messages, or for the production, transmission, delivery or furnishing of heat, light, water or power, or for the collection, treatment, purification and disposal in a sanitary manner of liquid and solid waste, sewage, night soil and industrial waste, but said term shall not include a municipality that may now or hereafter acquire, own, or operate any of the foregoing facilities.
«
"The term 'municipality' as used in this act shall mean any city or town of the state of Indiana.
tt
"The term 'municipally owned utility' shall include every utility owned or operated by a municipality."
The Commission is granted authority to conduct investigations and hearings in §54-408, Burns' 1951 Replacement, as follows:
"Complaints — Investigations and hearing.— Upon a complaint made against any public utility by any mercantile, agricultural or. manufacturing society or by any body politic or municipal organization or by ten [10] persons, firms, corporations or associations, or ten [10] complainants of all or any of the aforementioned classes, or by any public utility, that any of the rates, tolls, charges or schedules or any joint rate or rates in which such petitioner is directly interested are in any respect unreasonable or unjustly discrimina tory, or that any regulation, measurement, practice or act whatsoever affecting or relating to the service of any public utility, or any service in connection therewith, is in any respect unreasonable, unsafe, insufficient or unjustly discriminatory, or that any service is inadequate or can not be obtained, the commission shall proceed, with or without notice, to make such investigation as it may deem necessary or convenient. But no order affecting said rates, tolls, charges, schedules, regulations, measurements, practice or act complained of, shall be entered by the commission without a formal public hearing. [Acts 1913, ch. 76, §57, p. 167.]"
The Commission is empowered to enforce the Public Service Commission Act by §54-714, Burns' 1951 Replacement, which provides:
"Enforcing provisions of act. — The commission shall inquire into any neglect or violation of the laws of this state or the ordinances of any city or town by any public utility doing business therein, or by the officers, agents or employees thereof, or by any person operating the plant of any public utility, and shall have the power, and it shall be its duty, to enforce the provisions of this act, as well as all other laws, relating to public utilities. Any forfeiture or penalty herein provided shall be recovered and suit therein shall be brought in the name of the state of Indiana in the circuit or superior court where the public utility has its principal place of business. Complaint for the collection of any such forfeiture may be made by the commission or any member thereof, and, when so made, the action so commenced shall be prosecuted by the general counsel [Acts 1913, ch. 76, §124, p. 167.]"
Examination of the statutes, above set forth, discloses that municipal utilities, and particularly appellant, a municipal utility of a first class city as in the instant case, are not subject to the general grant of authority to the Public Service Commission. It is not contested that appellants are within the definition of a municipal utility, or óf a municipal utility of a first class city.
Appellees point out, however, that in some instances the Public Service Commission does have jurisdiction over municipal utilities; Certain statutes do require the Commission's formal • approval, at least, of municipal utilities' acts. An example of this is rate making. See §48-7103, Burns' 1963 Replacement. We think the two statutes are not necessarily in conflict. Where one statute deals with a subject in general terms, and another statute deals with a part of the same subject in a more detailed manner, the two statutes should be harmonized, if possible. State ex rel. Davenport v. International Harvester Co. (1940), 216 Ind. 463, 25 N. E. 2d 242. The more detailed statute will prevail, as to the portion of the subject matter that it covers, if there is a conflict. See New Albany v. Lemon (1925), 198 Ind. 127, 149 N. E. 350. It would seem, therefore, that in those areas specifically set forth by statute the Commission may have jurisdiction; but in areas not specifically set forth, the general statute exempting municipal utilities from Public Service Commission jurisdiction controls.
It may be contended, however, that the appellants, by doing the alleged acts outside their statutory authority and territory lost the status as a municipal utility and, in effect, became a public utility. We feel, however, that we need not decide this proposition.
Our Legislature granted authority to "any person, firm, or corporation authorized to do business in this state and engaged in thé business of transporting or distributing gas by means of pipelines into, within or through this state for ultimate public use, or any municipal corporation so engaged" to condemn subsurface strata or. formations in land and necessary rights incident thereto, for constructing, maintaining, drilling, utilizing and operating an underground gas storage reservoir. See Acts of 1959, ch. 5, §2, p., 16; §3-1730, Burns' 1946 Replacement (1963 Supp.). It appears, therefore, that, with one exception, the acts alleged in the petition before the Commission were not without the statutory authority of the appellants, who assert that they come within the statutory grant.
It seems, then, that the only allegation in the petition which could furnish a basis for the contention is that appellants were furnishing gas service to inhabitants of Greene County, since, as to all other allegations, the Commission is clearly without any jurisdiction over appellants.
The Commission held that it had authority to grant the appellees' request in the prayer for relief, due to the said allegation as to gas service. We must disagree with this assertion. The Commission has authority to conduct an investigation, on petition of ten (10) persons, of rates, tolls, charges, schedules, joint rates, or any regulation, measurement, practice or act affecting or relating to the service of any public utility which is in any respect unreasonable, unsafe, insufficient or unjustly discriminatory. See §54-408, supra. However, the question involved here is whether or not appellants are operating. extraterritorially by furnishing gas service outside the . statutory limit, thereby violating the law. The Commission, therefore, has no authority to conduct an investigation on this question on petition by the appellees herein. .
The, Commission is empowered by §54-714, supra, to enforce the Public Service Commission Act. Perhaps the Commission may have authority to inquire into any violation of the laws of this state and recover any forfeiture or penalty by bringing a suit in the name of the state of Indiana, in the proper circuit or superior court. That question, of course, is not before us and we need not decide it.
It appears that the allegations of the petition and prayer for relief have no proper place in an administrative hearing of this type. Such things as fraud and rescission of contracts are, instead, proper items for the judicial branch of our government.
In our opinion, the petition fails to set forth sufficient ultimate facts to establish jurisdiction in the Public Service Commission.
Reversed.
Carson, C. J., Hunter, P. J., Kelley and Ryan, JJ., concur.
Pfaff, J., dissents with opinion.
Cooper and Faulconer, JJ., not participating.
. We think the Legislature did not intend generally by the enactment of § 54-449, Burns' 1951 Replacement (1963 Supp.), that this Court should serve as a referee m the conduct of hearings before the Public Service Commission. This Court generally will decline jurisdiction of appeals from the Commission unless all administrative remedies before the said Commission are exhausted; however, as here, an order of the Commission in relation to its jurisdiction appears to warrant the recognition of a petition for review.