Title: City of McPherson v. State Corporation Commission
Citation: 174 Kan. 407, 257 P.2d 123
Docket Number: 38,880
State: Kansas
Issuer: Kansas Supreme Court
Date: May 9, 1953

174 Kan. 407 (1953)
257 P.2d 123
THE CITIES OF McPHERSON, et al., Appellees,
v.
THE STATE CORPORATION COMMISSION OF THE STATE OF KANSAS, et al., Appellants, and THE KANSAS POWER AND LIGHT COMPANY, Appellant. NATIONAL GYPSUM COMPANY, Appellee,
v.
THE STATE CORPORATION COMMISSION OF THE STATE OF KANSAS, et al., Appellants, and THE KANSAS POWER AND LIGHT COMPANY, Appellant.
No. 38,880

Supreme Court of Kansas.
Opinion filed May 9, 1953.
Jay Kyle, of Topeka, argued the cause, and Robert M. Corbett, of Topeka, was with him on the briefs for the appellant, State Corporation Commission of the State of Kansas.
Clayton E. Kline, of Topeka, argued the cause, and M.F. Cosgrove, Balfour S. Jeffrey, and Robert E. Russell, all of Topeka, were with him on the briefs for the appellant, The Kansas Power and Light Company.
Jerome M. Joffee, of Kansas City, Mo., argued the cause, and Russ B. Anderson, city attorney, of McPherson, and Charles C. Calkin, of Kingman, were with him on the briefs for the appellee cities.
Harry W. Colmery and James E. Smith, both of Topeka, and Paul R. Wunsch, of Kingman, were on the briefs for the appellee, National Gypsum Company.
The opinion of the court was delivered by
HARVEY, C.J.:
These appeals are from orders of the trial court sustaining motions of the appellees to set aside orders of the State Corporation Commission as being unlawful and unreasonable on their face without an examination of the record before the Commission required by G.S. 1949, 66-118d.
The legislature, by statute (G.S. 1949, 74-601), organized the State Corporation Commission, which hereinafter will be called the "Commission," and by chapter 66, Laws of 1949, gave the Commission full power, authority and jurisdiction to supervise and control public utilities, as defined by the act, doing business in this state, and empowered it to do all things necessary and convenient *408 for the exercise of such power, authority and jurisdiction. The Kansas Power and Light Company, hereinafter called the "Company," is a public utility as defined by the act (G.S. 1949, 66-104). It is a Kansas corporation. Its business is confined to Kansas. A part of its business is to generate electricity, which it distributes to various places in the state for sale. This part of its business is not involved here. As a part of its business it purchases natural gas from producers or pipe lines, which it sells to various cities and industries.
The Company has three separate gas systems. First, it distributes gas to Atchison, Leavenworth, Lansing and Emporia, and for this it obtains its supply of gas wholesale from the Cities Service Gas Company, which delivers the gas at the town borders. This system is not involved here. Second, it distributes gas in fifteen Kansas cities located along the line of the Northern Natural Gas Company, from which it purchases the gas wholesale at the city gates. Only as it pertains to the proposed increases in industrial rates is this system directly concerned. Third, it maintains a main transmission system from the Hugoton gas field, which it owns and operates and from which it distributes gas to 107 cities in Kansas. This is not connected with either the first or the second system above mentioned. It is the one involved here.
On November 24, 1951, the Company filed with the Commission, under G.S. 1949, 66-117, an application requesting the consent of the Commission to file and place in effect certain changed schedules of rates to be charged for natural gas which affected only two classes of rates: (1) Since 1931 the Company had on file and in effect its general gas rate schedule known as GG-6, which covered its charges for natural gas for domestic and commercial purposes, to all its customers served from its main transmissions system, with the exception of fifteen named cities, which fifteen cities, while being served from the Company's main transmission system had been receiving gas at rates lower than those contained in Schedule GG-6, by reason of their proximity to local gas fields which had been exhausted. The application requested the Commission to place these cities and their inhabitants on the same schedule of rates in effect in the other ninety-two cities served by the company on its main transmission system, eliminating an existing discrimination in their favor. (2) To replace its present industrial rate schedule, known as the Company's Schedule OCG-2, which, with slight amendments, has been in effect since 1931, by the filing and placing *409 into effect a new interruptible contract gas rate schedule designated as ICG-1.
These requests were of a character that the Commission could have given or withheld its consent without a hearing. (See, Wichita R.R. v. Pub. Util. Comm., 260 U.S. 48, 56, 43 S. Ct. 51, 54, 67 L. Ed. 124, 129.) Counsel for appellees frankly admit this to be true. In State, ex rel., v. Postal Telegraph Co., 96 Kan. 298, 306, 150 Pac. 544, 548, speaking of the procedure in such a case, the court used this language:
Since the application involved numerous users of gas the Commission concluded to have a hearing and gave notice for a hearing on December 19, 1951. At that time representatives of twelve of the cities which previously had been receiving gas from the Company at a rate lower than its GG-6 schedule and some of the users of gas for industrial purposes, including the National Gypsum Company, appeared and asked for further time for preparation for the hearing. The Commission granted these requests and set the hearing for March 3, 1952, on which date and the two days following the hearing was held. At this hearing testimony was taken which made a record of 426 pages of transcript and forty-nine exhibits. At the close of the hearing the Commission took the matter under advisement and on April 30, 1952, filed its order, a copy of which is hereto attached and marked "Appendix A," giving its consent to the putting in of the rates as requested by the Company. On the same date the Commission filed its memorandum opinion stating the pertinent facts and giving the reasons which prompted it to consent to the Company's application. This opinion is hereto attached and marked "Appendix B."
The protesting cities and the National Gypsum Company, an industrial gas consumer, filed motions for rehearing. These were duly heard by the Commission and overruled. Within due time and on June 9, 1952, the twelve protesting cities and the National Gypsum Company, proceeding under our statute (G.S. 1949, 66-118c), filed their respective applications for review in the district court of Kingman county and on the same date filed in that court motions for immediate reversal of the order of the Commission of April 30, 1952, *410 and gave notice of the hearing of such motions on June 19, 1952. The clerk of the district court of Kingman county duly notified the Commission and the Company of the filing of the petitions for review and of the motions and of the date the motions were noticed to be heard. On June 19, 1952, the Commission appeared by its counsel; also the Company appeared and asked leave to intervene in opposition to the motions, which leave was granted.
The transcript of the hearing before the Commission had not been filed in the district court. The motions for immediate reversal of the order of the Commission made on April 30, 1952, were taken up for hearing. After the argument the court made an oral decision in open court, which was recorded as a part of the case and constituted the findings of fact and conclusions of law of the court. A copy is attached as "Appendix C." These were incorporated in and made a part of the journal entry. The court found that the order of the Commission of April 30, 1952, "is unlawful and unreasonable in its entirety and should be vacated and set aside." Judgment was rendered accordingly. The court further adjudged that the proceedings and judgment of the court should be transmitted by its clerk to the Commission. The Commission and the Company each filed a motion for a new trial, which were considered by the court and overruled.
We turn now to the legal questions presented here. Counsel for the respective appellants contend the trial court did not follow the procedure outlined by our statute, but adopted a procedure of its own, that it considered matters not before it, and that its conclusions were erroneous.
The pertinent sections of our statute, all in G.S. 1949, outlining the procedure and describing the duties of the district court in a case such as this, may be summarized or quoted in whole or in part as follows:
66-118c outlines the procedure for review by the district court of decisions of the Corporation Commission. This procedure was followed and the matter was properly taken to the district court for review, and the Commission and interested parties were given notice as provided in that section.
66-118d reads as follows:
66-118f in part reads:
66-118k in part reads:
Counsel for appellants contend the trial court had no jurisdiction to entertain appellees' motions without having before it the transcript of the proceedings before the Commission. The point is well taken. Our district courts have only such jurisdiction as may be provided by the legislature. (Const. Art. 3, § 6.) Here the legislature outlined the procedure before the court and specifically provided that, "No court of this state shall have power to set aside, modify or vacate any order or decision of the commission, except as herein provided." Several of our cases have thoroughly discussed the procedure of the district court in such matters. (See Southern Kansas Stage Lines Co. v. Public Service Comm., 135 Kan. 657, 11 P.2d 985; Union Pac. Rld. Co. v. State Corporation Commission, 165 Kan. 368, 194 P.2d 939; White Eagle Oil Co. v. State Corporation Comm., 168 Kan. 548, 554, 214 P.2d 337, considering another statute having the same conditions *412 (see Wakefield v. State Corporation Comm., 151 Kan. 1003, 101 P.2d 880); Rock Island Motor Transit Co. v. State Corporation Comm., 169 Kan. 487, 219 P.2d 405.)
Counsel for appellees cite Atchison, T. &amp; S.F. Rld. Co. v. State Corporation Commission, 166 Kan. 548, 203 P.2d 211, as a case in which the trial court and this court passed upon an order of the Commission upon a motion. In that case, however, there was a transcript filed by the Commission with the district court (p. 550). A re-examination of the abstract and briefs in that case discloses that counsel for appellant so stated on page 7 of its brief and the appellee so stated on page 4 of its brief. The record also discloses that the trial court considered the Commission's transcript. It is true that there were two or more motions in that case which were ruled upon by the trial court and this court, but the case is not an authority for the hearing of motions to set aside the decision of the Commission when the district court has no transcript before it.
Counsel for appellees further contend that in this case the filing of the Commission's transcript with the district court was waived by a stipulation, shown in the journal entry. We think that point is not well taken. The stipulation says nothing about waiving the filing of the transcript before the hearing upon the motion. Obviously the trial court did not consider it was waived, for in the second paragraph of its oral findings it treated that subject and held that it had authority to proceed without the transcript being filed. More than that, the parties to an action cannot waive the jurisdiction of the court as the subject matter of the action. (See, Behee v. Beem, 156 Kan. 115, syl. 3, 131 P.2d 675, and the authorities cited therein.)
Counsel for appellants further contend the court was not justified in its conclusion that the Commission's hearing was held under G.S. 1949, 66-110, which provides for a full hearing for the purpose of fixing a rate base. This point is well taken. Clearly, the Company's application to the Commission was made under G.S. 1949, 66-117. The application was for the consent of the Commission to put in certain schedules of rates. As previously stated here, the Commission could have given or could have withheld its consent without a hearing, but as stated in State, ex rel., v. Postal Telegraph Co., supra, it was the duty of the Commission to verify the facts stated in the application. Certainly if the Commission thought it appropriate to have a hearing for that purpose it had authority to do so. The Commission specifically stated in its memorandum opinion *413 that it was not conducting a hearing for the making of a rate base. The court was not justified in construing the action of the Commission as being something which the Commission had not done. Neither was it justified in holding that the Commission could not determine whether it would consent to or withhold its consent to the application made to it by the Company without a hearing under 66-110 and determining a rate base. The jurisdiction of the court was to review what the Commission had done. That is all it had authority to do.
Counsel for appellees cite Southwestern Bell Tel. Co. v. State Corporation Comm., 169 Kan. 457, 219 P.2d 361, as authority for the trial court in this case to consider an application to put in a schedule of rates filed under 66-117, to be heard before the Commission under 66-110. The case is not in point here. In that case Southwestern did file its schedule of rates under 66-117, but its application to put the rates into effect disclosed on its face that the hearing of the application and the making of the order would require an examination of the existing rates, the assets, and income of the application. As a result of this, as shown on page 459 of the opinion:
This order also provided that the expense of the hearing should be paid by the applicant, as authorized by 66-1502. No such situation existed in this case. Since the transcript of the proceedings before the Commission was not before the trial court it has not been abstracted, so we are handicapped, as was the trial court, in knowing all that transpired before the Commission. From the order of the Commission and its memorandum opinion, which were *414 before the trial court and are abstracted here, it seems clear that no question concerning the lawfulness or reasonableness of the rates charged by the Company to the consumers of gas in the 92 cities on the Company's main transmission line was involved in the hearing. The trial court was not justified in considering the question of the lawfulness and reasonableness of the rates charged by the Company in those ninety-two cities. Its function was to consider what the Commission had considered, not to inject its own views into what should have been considered by the Commission. The court had no authority under the statute to review the work of the Commission except in the manner and to the extent the statute gave it such authority. It was error to do otherwise.
In paragraphs 11 and 12 of the Commission's order the Commission found some unaccounted for gas and some interdepartmental transactions of gas between the gas and electric departments of the Company which it desired to further investigate. It transferred these matters to its docket No. 43579-U for hearing under 66-110 and 66-1501. The trial court was of the opinion that those matters should be heard before the Commission should give its consent to the application made by the Company. In this the court erred, for two reasons: First, it is the function of the Commission to determine when and under what doctrine those matters should be heard. The court is given no authority to determine that question; and, second, any modification of the rates as a result of such hearing would affect the users of gas in all of the 107 cities serviced by the Company on its main transmission line and would not be applicable to the 15 cities alone which previously had enjoyed a lower rate.
In the oral statement made by the court, later characterized as its findings, the court said nothing to indicate the invalidity or unreasonableness of the interruptible industrial contract gas rate schedule (ICG-1) which the Company had asked the consent of the Commission to put into effect, and which consent was granted. Notwithstanding that, the court set aside as unlawful and unreasonable the order of the Commission respecting that matter. We see nothing in this record that justified that action by the court.
There is another matter which we think worth while to note. The portion of the statute (66-118k) previously quoted, requires the trial court, when it reverses an order of the Commission in whole or in part, to make "findings of fact and conclusions of law." The oral statement made by the court in this case, later designated *415 as findings of fact, can hardly be said to comply with the statute. Much of it is argumentative and some of it deals with matters not included in the order or in the memorandum opinion of the Commission. This procedure was inaccurate.
The result is that the judgment of the trial court must be reversed. It is so ordered.