Case Name: POTASH COMPANY OF AMERICA, Plaintiff-Appellant, v. NEW MEXICO PUBLIC SERVICE COMMISSION and Southern Union Gas Company, Defendants-Appellees
Court: Supreme Court of New Mexico
Jurisdiction: New Mexico
Decision Date: 1956-09-10
Citations: 62 N.M. 1
Docket Number: No. 6015
Parties: POTASH COMPANY OF AMERICA, Plaintiff-Appellant, v. NEW MEXICO PUBLIC SERVICE COMMISSION and Southern Union Gas Company, Defendants-Appellees.
Judges: “"'COMPTON, C. J., and LUJAN and KIKER, JJ., concur.
Reporter: New Mexico Reports
Volume: 62
Pages: 1–18

Head Matter:
303 P.2d 908
POTASH COMPANY OF AMERICA, Plaintiff-Appellant, v. NEW MEXICO PUBLIC SERVICE COMMISSION and Southern Union Gas Company, Defendants-Appellees.
No. 6015.
Supreme Court of New Mexico.
Sept. 10, 1956.
Rehearing Denied Dec. 10, 1956.
Gilbert, White & Gilbert, Santa Fe, Lewis, Grant & Davis, Denver, Colo., Roy H. Blackman, Jr., Carlsbad, for appellant.
Richard H. Robinson, Atty. Gen., Alfred P. Whittaker, James B. Cooney, Sp. Asst. Atty. Gen., for New Mexico Public Service Commission.
Manuel A. Sanchez, Santa Fe, Atwood & Malone, Roswell, Willis L. Lea, Jr., Dallas, Tex., for Southern Union Gas Co.

Opinion:
SADLER, Justice.
The question for decision, prior to hearing this appeal on its merits, is whether the plaintiff below, the appellant here, should be denied the hearing in this proceeding now sought, by reason of its failure to exhaust the statutory remedy provided by the New Mexico Public Utility Act, 1953 Comp., c. 68, Art. 9, § 68-9-1 to 68-9-7, for reviewing orders of New Mexico Public Service Commission.
The appeal is from a judgment of the district court of Santa Fe County dismissing the amended complaint of Potash Company of America, as plaintiff, against the New Mexico Public Service Commission and Southern Union Gas Company, the parties joined as defendants in the amended complaint filed in thejdistrict court of Santa Fe County May 19, 1954. The parties to the appeal will be referred to hereinafter as follows: The appellant, who was plaintiff below, as the "Potash Company," or "plaintiff," and the defendants either by that name or as the "Commission" and "Southern Union," all as best serves clarification in each instance.
The controversy out of which the appeal arises originated in certain action taken by the Commission on the ex parte application of Southern Union putting into effect an interim rate change ordered by the Commission. The amended complaint not only sought to enjoin the Commission from enforcing the new rate but, as "veil, to recover from Southern Union excessive payments said to have been made for gas supplied under the new rate.
According to allegations of the amended complaint on or about April 30, 1948, the Potash Company and Southern Union entered into a modification of an existing contract under which the rate for gas furnished to former by the lattér should be-approximately 9 cents per MCF and obligating the plaintiff to take and pay for certain specified minimum quantities of gas. The modified contract also provided that it and said rate should be in full force and effect until April 30, 1956, but that in latter year the rate should be adjusted to reflect increases in cost to Southern Union; and providing, further, that it could not be altered by either party without written consent of the other. In due season and on October 11, 1948, the Commission entered its Order No. 96, whose effect was to authorize Southern Union to enter into such contract and to continue to charge plaintiff the rates therein specified until further order of the Commission.
So matters stood, says the amended complaint, when on or about December 18, 1948, Southern Union for the first time approached Potash Company requesting modification of the contract of 1948, representing that it anticipated an increase in the cost of gas to an extent making it desirable to amend the existing contract by raising the rate charged plaintiff; that again about October 8, 1953, Southern Union conferred with plaintiff on the subject of negotiating an increase in rates to be charged for gas based on substantial increases required to be paid by Southern Union to El Paso Natural Gas Company.
The amended complaint went on to say that while these negotiations were still pending, no settlement of Southern Union's request having been reached between the parties, Southern Union, nevertheless, on. February 16, 1954, without any notice to the plaintiff, filed with the Commission a purported increase in rates for gas furnished plaintiff accompanied by a petition requesting that the increase indicated be made effective immediately. This filing was rejected by the Commission on February 17, 1954. On the same day, however, a second filing with the Commission was made announcing an increase in the contract rate from approximately 9 cents per MCF to approximately 17 cents per MCF, to be effective until the Commission could hold a hearing to determine and set a new and proper rate. The interim rate as thus increased was to be effective February 20, 1954. This filing, like the first one, was without notice to plaintiff.
Thereupon, and on February 17, 1954, as the amended complaint goes on to allege in paragraphs 11 and 12, thereof:
"11. On February 17, 1954, the Commission, apparently relying upon the ex parte statements of Southern Union in its petition and upon other matters a.s stated in its order, without notice or formal hearing or any hearing at which the plaintiff was present, entered an interlocutory Order purporting to make the rate increase requested by Southern Union effective as of February 20, 1954. A copy of said order of the Commission is annexed to the Complaint as Exhibit F. .
"12. On or about March 8, 1954, the plaintiff moved the Commission to dismiss and vacate its order of February 17, 1954, for lack of jurisdiction. Copy of such motion is annexed to the Complaint as Exhibit G. The Commission heard argument of counsel for the plaintiff and Southern Union on said motion on or about March 18, 1954. On or about March 25, 1954, the Commission denied the plaintiff's motion to dismiss, and refused to modify its order of February 17, 1954, and continued to take the position that the rate increase was effective as of February 20, 1954."
Actually, the amended complaint contained three claims. The first two were directed against Southern Union alone and were alternative claims to recover 'the amounts paid by the plaintiff to the utility for gas service for the period commencing February 21 and ending March 20, 1954, by virtue of the tariff rate in effect under the provisions of the Interlocutory Order and Notice of Hearing in Case No. 418 before the Commission which were over and above the rate formerly in effect for the gas service provided to the plaintiff by the utility.
The third claim was directed against both the Commission and Southern Union. It asserted that the action was instituted under the provisions of Section 74 of the Public Utility Act of New Mexico, § 68-10-2, 1953 Comp. Paragraphs 1, part of 10, 11, 12, 13, 14, 16, 17 and 18 were substantially identical to the allegations contained in the original complaint. The prayer sought declaratory judgment relief and injunctive relief. The Commission filed a Motion to Strike the allegations contained in paragraphs 2 through 9, part of paragraph 10 and paragraph 15 and its Motion to Dismiss the Third Claim. Southern Union filed its Motion to Dismiss the first and second claims asserted against it, its Motion to Strike the allegations sought to be stricken by the Commission and its Motion to Dismiss the Third Claim. On August 5, 1954, the motions were argued before the court. Thereafter briefs were submitted by the parties, the plaintiff submitting its brief on August 23, 1955, the defendants submitting a joint brief on- October 13, 1955, and the plaintiff submitting its reply brief thereafter.
On June 29, 1955, the district court entered its Order. The Order dismissed the first and second claims without prejudice. The Order dismissed the third claim against both defendants, without prejudice, on the grounds that the plaintiff had not exhausted its administrative remedy. The appeal herein is made from the Order so entered.
The matter of what was a just and reasonable rate proceeded before the Commission notwithstanding the filing by Potash Company of the action out of which this appeal arises in the district court of Santa Fe County on April 5, 1954, as hereinabove stated. Following the steps taken before the Commission in the matter, already mentioned above, and due notice to the parties herein, the Potash Company filed a motion asking the Commission to join as parties all. consumers of gas from Southern Union, which motion was denied. The Potash Company next moved for a continuance which the Commission likewise denied. Thereupon, in due course, the hearings began consisting of three sessions, the first convening on May 28, 1954, and continuing for three days; the second was commenced' June 28, 1954, and continued for five days;the third began August 23, 1954, lasted thirteen days, and concluded on September 9, 1954.
On January 26, 1955, in case No. 418, the docket number borne by this proceeding, the Commission entered its final order fixing a new rate at approximately 17 ‡ per MCF of gas, effective from February 20, 1954 (the effective date of the-Commission's earlier order). The Potash Company filed its application for rehearing as provided by the Public Utility Act which was denied on March 16,' 1955. Thereafter, on April 15, 1955, there was filed in the district court of Eddy County, New Mexico, a petition by Potash Company seeking the statutory review of the final Order of the Commission entered January 26, 1955, and of the Order denying application for rehearing entered March 16, 1955. Pursuant to the requirements of the Public Utility Act the Commission certified to the district court of Eddy County the record of all the testimony taken before the Commission in the matter and a transcript of all proceedings therein, which petition for review together with the record thereof is now pending, undisposed of, before, the district court of Eddy County as cause No. 15,107 on the civil docket of said court.
We should state at " this point that the Commission early in the proceedings before it entered an order requiring Southern Union to give a bond guaranteeing the refund of any money that might have beén collected by it from Potash Company over and above what is found by the Commission as a just and reasonable rate following a hearing before it to fix the same. The bond mentioned was given and Potash Company has been protected throughout by such a bond.
In due course and seasonably, following the filing of its brief in chief by the Potash Company, the Commission filed herein its motion to dismiss this appeal, the material parts of which are, as follows:
"1. The question presented by the appeal from the order of dismissal, without prejudice, has become moot.
"2. The issue whether the Commission, in entering its Order of February-17, 1954 in Case No. 418, exceeded its jurisdiction has become moot.
"3. Matters have occurred since the institution of the action below and prior to, and pending this appeal, as set forth in the Opinion and Order of the Commission entered in Case No. 418 before it on January 26, 1955 (a copy of said Opinion and Order being attached hereto as Exhibit 1), and set forth in the Affidavit of L. W. Leibrand, Chairman of the Commission, attached hereto as Exhibit 2, reciting the events subsequent to January 26, 1955 relating to such Case No. 418, which include the statutory review of the Commission's action in Case No. 418 instituted by the Appellant in the District Court of Eddy County, New Mexico invoking the jurisdiction of that Court, these matters render any judgment which might-be entered herein ineffectual since the Commission has lost jurisdiction of the proceeding in Case No. 418 before it, a preliminary part of which was the Interlocutory Order and Notice of Hearing attacked by Appellant in the Action below.
"4. The appeal herein seeks a review of the action taken by the Commission in Case No. 418 in a manner not permitted by the method prescribed by statute 'for review and appeals,"
We first heard counsel argue orally the motion to dismiss which, incidentally, was not joined in by Southern Union, and reserved ruling thereon pending hearing on the merits. At the same time we ordered the Commission to file its answer brief, the Southern Union having done so on same day the Commission filed its motion to dismiss. The cause was later argued at length on the merits and, now, with the cause before us, both on the motion and the merits, orderly treatment demands disposition of the motion first. If sustained we do not reach the merits. The trial court sustained the motion upon the stated ground the Potash Company had failed to exhaust its statutory remedy, a conclusion with which we are compelled to agree.
Counsel for the Potash Company strongly urge justification for this action is to be found in Section 74 of the Public Utility Act, 1953 Comp. § 68-10-2, reading as follows :
"In case the commission or its members shall undertake to act in excess of its jurisdiction and authority conferred under this act (68-3-1 to 68-11-5), or without jurisdiction; or in case the said commission or its members shall undertake to exercise rights or privileges not conferred upon it by this act or by law; or in case the said commission or its members shall fail or refuse in the performance of any duties or obligations imposed upon it by the terms of this act, then the person interested or whose rights are affected may bring suit by mandamus, prohibition, injunction, or other appropriate remedy against the said commission in its statutory name in this act provided, to compel performance of the duties and obligations imposed upon said commission by this act, or to restrain said commission and its members from the exercise of jurisdiction not by this act conferred. Consent of the state is hereby expressly given to the maintenance of such suits against said commission. Any such action shall be brought against said commission in the district court of Santa Fe County, New Mexico, or in the district court of the county in which the complaint or controversy arose. Any judgment or decree entered against the commission shall be binding upon the commission and each and every member thereof."
There is nothing in the foregoing section affording proof that the Commission in the proceedings before it in the matter in hand has acted either without or in excess of its jurisdiction. Indeed, a careful study of our Public Utility Act is satisfying that in entertaining the proceeding before it which gave rise to the present action, the Commission was moving strictly in conformity with the act creating it to determine one of the major questions submitted to its jurisdiction — a question of rates. 1953 Comp. § 68-5-4, vests in the Commission express jurisdiction, among other things, to regulate and supervise every public utility as respects its rates. It provides :
"The commission shall have general and exclusive power and jurisdiction to regulate and . supervise every public utility in respect to its rates and service regulations, and in respect to its securities, all in accordance with provisions and subject to the reservations of this act (68-3-1 to 68-11-5), and to do all things necessary and convenient in the exercise of such power and. jurisdiction. "
1953 Comp. § 68-6-1, provides:
"Every rate made, demanded or received by any public utility shall be just and reasonable."
Section 68-6-6 prohibits any unreasonable preference or advantage to any corporation or person as to rates or service. And 1953 Comp. § 68-6-7 contains express language conferring power on the Commission, by unilateral action, to make a change in rates, provided hearing on what is a fair and reasonable rate follows in due season on proper notice and an opportunity for all interested parties to be heard. Among other things, the section mentioned provides:
"Unless the commission otherwise orders, no public utility shall make any change in any rate which has been duly established except after thirty (30) days' notice to the commission, which notice shall plainly state the changes proposed to be made in the rates then in force, and the time when the changed rates will go into effect. The utility shall also give such notice of the proposed changes to other interested persons as the commission in its discretion may direct. All proposed changes shall be shown by filing new schedules, or shall be plainly indicated upon schedules filed and in force at the time and kept open to public inspection.. The commission, for good cause shown, may allow changes in rates, without requiring the thirty (30) days' notice, under such conditions as it may prescribe, " (Emphasis ours.)
In this connection, although not controlled by the Public Utility Act with which •we are now concerned, one of the matters of public concern and discussion over the years since statehood has been on the very issue of the ability- of public utilities to simply put into effect a change in rates by filing a new tariff-without an increase ascertained and declared by the tribunal having juris'diction of rates for the particular utility. Compare, State Corporation Commission v. Mountain States Tel. & Tel. Co., 58 N.M. 260, 270 P.2d 685.
It requires only a cursory examination of the telephone case just cited, and this one to demonstrate that the action here challenged is exactly what Mountain States Tel. & Tel. Co. in the earlier case attempted, namely, to put into effect an increase in rates of its own motion. In so far as the mechanics of the case in tire manner of its initiation are concerned, the real difference between that case and this lies in the fact that instead of approving the attempt to put the -raise into immediate effect and test its reasonableness later upon notice, the State Corporation Commission forbade putting into effect the operative portion of the order pending a hearing.
In the instant case, the Commission having jurisdiction of Potash Company on such matters approved the application to put the proposed rate into immediate effect and provided for a-hearing later. There, in the telephone case, the prayer for immediate effect to the raise was denied, except upon conditions, one of which was the giving of a bond for reimbursement of any part of the raise held to be excessive. The Commission imposed a like condition here. It thus is seen what a narrow line divides the two cases in so far as the exercise of jurisdiction by the two separate Commissions is involved.
Unquestionably, when this matter came on for hearing before the learned trial .judge, he was mindful of the provisions of 1953 Comp. § 68-10-2, relative to invoking his jurisdiction on the equity side to restrain the exercise by the Commission of acts entirely beyond or in excess of his court's jurisdiction. After all, such power inheres in a court of equity and a mere declaration of the power in the section invoked adds no new strength to the power. Compare Oliver v. Board of Trustees of Town of Alamogordo, 35 N.M. 477, 480, 1 P.2d 116. At the same time, the trial judge could see the overall pictqre of the Public Utility Act, enveloping the Commission with an aura of broad power and jurisdiction to determine just and reasonable rates and setting up a complete remedy within the framework of the Act for testing their propriety and reasonableness. See 1953 Comp. § 68-9-1 to 68-9-7. The first sec- . tion in Article 9 of this Chapter, reads:
"Any party to any proceeding before the commission may file a petition in the district court of the county in which the complaint or controversy before the commission had its origin, asking for a review of the commission's final orders therein, and charging in said petition that said order or orders are unreasonable and/or unlawful. Every petition for review shall state briefly the nature of the proceedings before the. commission, and shall set forth the order complained of and the grounds upon which the same is claimed to be unreasonable and/or unlawful upon which the petitioner will rely in the district court. Any person whose rights may be directly affected by said review may appear and become a party, or the court may upon proper notice order any person to be joined as a party."
There follow in this Article of Chapter 68, provisions setting up all the machinery for notice, trial procedure, judgment, and appeal. The Potash Company was familiar with these provisions of the Public Utility Act. Indeed, it already has set in motion the proceedings for a full and complete statutory review before the district court of Eddy County which, of course, will pass upon the very order whose entry the Potash Company now claims is beyond and in excess of the Commission's powers to make and enter. For us to enter upon a hearing of this case upon the merits, at this time, would be to render res adjudicada the prime issue to be determined in the statutory review now pending before the district court of Eddy County in the case mentioned and render further proceedings there a mere formality.
From all said on the merits in briefs filed here, we well may. assume the trial court in the proceeding pending there will be called upon to render some important decisions on how far the Commission may go in changing a so-called contract rate, after the public interest has entered the equation. The authorities are not all one way on the proposition by any means. If not careful, however, we shall be doing the very thing the Potash Co. has asked us to do, passing on the merits, so we shall proceed no further along this line.
The precise question before us now is whether Potash Company should have exhausted its statutory remedies before invoking the aid of equity. On several occasions we have furnished an affirmative answer to the inquiry in similar situations. See, Associated Petroleum Transport v. Shepard, 53 N.M. 52, 201 P.2d 772; American Refrigerator Transit Co. v. Shepard, 53 N.M. 271, 206 P.2d 551; Smith v. Southern Union Gas Co., 58 N.M. 197, 269 P.2d 745, and the very late case of Andrews v. Walker, 60 N.M. 69, 287 P.2d 423. See, also, from other jurisdictions, Croydon Syndicate v. Consolidated Edison Co., Sup., 72 N.Y.S.2d 846; Ethington v. Wright, 66 Ariz. 382, 189 P.2d 209; Arizona Public Service Co. v. Southern Union Gas Co., 76 Ariz. 373, 265 P.2d 435; Lemoyne Arms, Inc. v. Central New York Power Corp., 191 Misc. 709, 76 N.Y.S.2d 703; Atlantic Greyhound Corp. v. North Carolina Utilities Comm., 229 N.C. 31, 47 S.E.2d 473; Leighton v. New York Tel. Co., Sup., 84 N.Y.S.2d 369; Southwestern Bell Tel. Co. v. State, 202 Old. 291, 214 P.2d 715; Texas & N. O. R. Co. v. Houston Belt & Terminal Ry. Co., Tex.Civ.App., 227 S.W.2d 610; Interstate Natural Gas Co. v. Southern California Gas Co., D.C., 103 F.Supp. 317; Valley & Siletz R. Co. v. Flagg, 195 Or. 683, 247 P.2d 639, and United Merchants & Mfrs. v. South Carolina Electric & Gas Co., 4 Cir., 208 F.2d 685, 687.
We think the language of the United States Circuit Court of Appeals of the 4th Circuit in United Merchants & Mfrs. v. South Carolina Electric & Gas Co., supra, may very aptly be applied to efforts of plaintiff in the case at bar in so far as the functions of the courts and utility commissions are concerned. Among other things, the court said:
"We think this was a case for the Commission, with the right of appeal to the South Carolina courts. The jurisdiction of the Commission over public utility rates is plenary. Even had Carolina Electric given to United the contract claimed by United, this contract would have required approval by the Commission.
"It is not necessary for us to rule technically that United's civil action against Carolina Electric is a collateral attack upon a decision of the Commission. It is, at least, under the guise of a civil action for fraud, an attempt to by-pass the Commission, which should not be permitted. And there are many reasons justifying the refusal of a federal court to interfere, through the instant civil action, with the orderly functioning of the machinery set up by South Carolina for the control of rates to be charged by a public utility.
"It is at least an open question whether the alleged contract here between United and Carolina Electric is opposed .to public policy. Certainly such con- ' fracts should be viewed with suspicion ~'hy the courts." (Emphasis ours.)
V'We think the order appealed from is corjr.eqt and should be affirmed.
':It is so ordered.
"'COMPTON, C. J., and LUJAN and KIKER, JJ., concur.