Opinion ID: 1709354
Heading Depth: 2
Heading Rank: 2

Heading: Statutory Authority for Issuance of Temporary Injunction

Text: Even assuming MPSC's refusal to grant Consumers' request for immediate effectiveness of the proposed rates and MPSC's October 6 notice of hearing constituted an order fixing rates for purposes of § 26, the relief granted was outside the scope of the statute. Section 26 permits the utility company to petition the circuit court to vacate and set aside any such order on the ground that the    rates fixed are unlawful or unreasonable. We hold that the language vacate and set aside any such order is clear and unambiguous. Dussia v Monroe County Employees Retirement System, 386 Mich 244; 191 NW2d 307 (1971). The power to vacate unreasonable or unlawful rates is quite separate from the power to grant rates. The Legislature exclusively set up the MPSC, with its special expertise and factfinding powers, to authorize rates. Thus, it is obvious that the language vacate and set aside any such order does not authorize the issuance of a temporary injunction fixing a rate schedule. The further question is whether the clause to make such other order or decree as the court shall decide to be in accordance with the facts and the law authorizes the setting of utility rates. It is clear that this language authorized the general exercise of equity powers, but that still does not answer the question whether general equity power permits the setting of utility rates. We shall consider that question specifically in Part V. But before doing that let us consider a decision of this Court which has not been modified or overruled. Our reading of 1909 PA 300, § 26, comports with the decision of this Court in Michigan Central R Co v Wayne Circuit Judge, 156 Mich 459, 470; 120 NW 1073 (1909), with respect to 1909 PA 300's predecessor, 1907 PA 312, § 26, using practically the identical language, including: [T]he circuit courts in chancery are hereby given jurisdiction of such suits and empowered to affirm, vacate or set aside the order of the commission    and to make such other order or decree as the courts shall decide to be in accordance with the facts and the law. In that case, this Court said: We do not construe the provisions of this act to lodge in the courts the power to establish rates. The power conferred upon the courts is solely to determine whether the rates are confiscatory or unreasonable. If the courts should so find, they are not authorized to determine what are reasonable, but the matter must again be referred to the commission to establish other rates. Accord, Michigan Consolidated Gas Co v Public Service Comm, 389 Mich 624, 642, 647; 209 NW2d 210 (1973). [1] In conclusion, we hold that the Court of Appeals erred in finding that statutory appellate jurisdiction under § 26 sustained Circuit Judge Salmon's temporary injunction of October 21, 1969. V. GENERAL EQUITY POWER TO ESTABLISH TEMPORARY UTILITY RATES Consumers placed its chief reliance in petitioning the circuit court to establish its proposed rate schedule on the fact that that court had general equity jurisdiction. Ingham Circuit Judge Salmon's October 21, 1969 preliminary order of injunction implicitly assumes general equity jurisdiction and makes no mention or reliance on 1909 PA 300, § 26. Ingham Circuit Judge Hotchkiss, in his December 14, 1977 opinion determining the legality of the charge and collection of the rates set by Judge Salmon, stated: In granting the injunction, the court relied on its general equity jurisdiction.    The court treated Consumers' suit as a direct action and the court was therefore not limited by the statutory appeal provision of MCL 462.26.    [T]he court exercised its own authority and jurisdiction. The Court of Appeals noted: It is unnecessary to decide in this case whether the circuit court had original equity jurisdiction to grant the preliminary injunction at issue. 88 Mich App 638. The Court of Appeals rested its decision on 1909 PA 300, § 26 and 1939 PA 3, § 6a. We have in Parts IV and V held that the Court of Appeals erred in this. We therefore here address the issue whether the Ingham Circuit Court correctly assumed that original general equity jurisdiction includes the authority to fix utility rates. Any consideration of whether the Ingham Circuit Court correctly assumed that original equity jurisdiction includes the authority to fix utility rates must begin with the basic proposition that ratemaking is a legislative function. In City of Niles v Michigan Gas & Electric Co, 273 Mich 255, 263; 262 NW 900 (1935), this Court said: Primarily the authority to fix rates for public utilities is a governmental power vested in the Legislature. The issue in that case was what rate fixing authority was granted by the Legislature to the municipality. The Legislature has over a period of years properly delegated its rate fixing power to an executive agency, most recently MPSC. It is undisputed that the Legislature has the authority, through its police powers, to regulate business affected with public use. See Michigan State Telephone Co v Michigan Railroad Comm, 193 Mich 515; 161 NW 240 (1916). The Legislature initially delegated this authority to the Railroad Commission, 1907 PA 312, which was expanded and replaced by the Public Utilities Commission, 1919 PA 419, which in turn was replaced by the MPSC. 1939 PA 3; MCL 460.1 et seq.; MSA 22.13(1) et seq. [2] The authority to set rates and rate structure, therefore, has always been a legislative function properly delegated to an administrative agency. The courts have neither the authority nor the expertise to determine what rate structure most equitably spreads a rate increase among commercial, industrial, household and other users. The Legislature has delegated its rate setting power to MPSC with considerable particularity. Not only is the general rate setting function described but provision is made for a method of seeking partial and immediate relief pending final order (1939 PA 3, § 6a) and for general appeal in case of dissatisfaction (1909 PA 300, § 26). Subsequent to this case the Legislature has set a goal for MPSC to conclude its deliberations within nine months. 1972 PA 300; MCL 460.6a(3); MSA 22.13(6a)(3). We have recognized that none of this legislative delegation contemplates any judicial rate setting. Michigan Central R Co v Wayne Circuit Judge, supra ; recently reaffirmed in Michigan Consolidated Gas Co v Public Service Comm, 389 Mich 624, 642, 647; 209 NW2d 210 (1973). It is abundantly clear that the Legislature has carefully circumscribed its rate setting power, confining it to the MPSC and excluding judicial rate setting. Consequently, we hold that if Ingham Circuit Judge Hotchkiss intended to rule that Circuit Judge Salmon had general equity jurisdiction to fix rates, he was in error. Such a holding would sanction the breach of constitutional separation of powers, authorizing the judicial branch to exercise a function belonging to the Legislature. Const 1963, art 3, § 2. VI. GENERAL TELEPHONE CASE Ingham Circuit Judge Hotchkiss, in his December 14, 1977 opinion, speaking of Ingham Circuit Judge Salmon's rate setting injunction, observed: In granting the injunction, the court relied on its general equity jurisdiction. See General Telephone Co of Michigan v Public Service Comm, 341 Mich 620 [67 NW2d 882] (1954). In General Telephone Co, the company appealed to the Ingham Circuit Court a rate order granting only a partial increase. That court took additional testimony, which it transmitted to MPSC. MPSC refused to consider the additional testimony and would not modify its order. The court thereupon considered MPSC's order and held the rates were unreasonable, unlawful and confiscatory. The court then remanded the matter to MPSC to fix just rates and pending MPSC action authorized the utility to collect rates not in excess of the rates it had requested MPSC to approve under a refund bond. This Court observed: The court by its decree did not establish a rate, but only provided, dependent upon final adjudication by the court, that the company could collect the charges it requested in its application as a trust fund under a bond   . 341 Mich 620, 632 (emphasis supplied). The General Telephone Co case was relied on in Michigan Consolidated Gas Co v Public Service Comm, supra . MPSC granted part of a rate increase requested by the utility. The Ingham Circuit Court noted that MPSC had made mistakes of law in computing the rate, remanded the matter to MPSC for reconsideration, and permitted the utility to collect the whole requested increase under bond subject to refund pending final order of MPSC. The circuit court relied on the General Telephone Co case (389 Mich 624, 633). The Court of Appeals in review (25 Mich App 512, 517; 181 NW2d 596 [1970]), as did this Court (389 Mich 624, 642-643), also relied on the General Telephone Co theory that the circuit court did not establish a rate, but only provided, dependent upon final adjudication by the court, that the company could collect the charges it requested in its application as a trust fund under a bond. To begin with, the General Telephone Co and Michigan Consolidated Gas Co cases are critically distinguishable from the instant case in that in each of those cases MPSC had issued a rate order that the circuit court had under review. In the instant case, MPSC had not issued a rate order. Otherwise the cases are substantially similar, although not on all fours. The issue raised by these two cases is whether there is a real difference, on the one hand, between the circuit court permitting the utility to collect its requested rates not approved by MPSC under bond subject to refund pending final MPSC decision and, on the other, setting a rate. The practical result pending MPSC's final decision is that the utility collects at a higher rate allowed by the court rather than the MPSC's original rate. Furthermore, the collection begins at the time of the court order rather than the final MPSC decision. So from the point of view of these two factors the court is in reality setting rates. On the other side of the picture, the court's order is temporary and subject to correction by the final order of MPSC. In addition the collections are under bond and subject to refund. However, the collections, as noted, date from the time of the court order rather than MPSC's final order. Permitting such a court order preserves the utility from unrecoverable loss from the time of the court order to the time of the final MPSC rate order if MPSC rules in its favor. This has equitable appeal. On the other hand, ratepayers are put to inconvenience and perhaps financial difficulty that subsequent repayment may not fully compensate. In addition, repayment may not find some ratepayers. On balance there may well be instances where such a system would be in the public interest. However, it is difficult to say that calling such a procedure not rate fixing is anything more than an exercise in semantics. It appears to us that the court is really setting rates. If it is setting rates, then it is, without license, intruding on the Legislature's power and function to set rates, and this Court should not permit it. This is particularly so because the courts lack the special expertise of the MPSC in the subject matter, as we have often remarked. We have held that the courts do not have general equity power to set rates and that the actions in General Telephone Co and Michigan Consolidated Gas Co do invalidly set rates. Furthermore, it is worth noting that during the administrative proceedings, when the issue of whether the MPSC could or should have ordered immediate implementation of Consumers' proposed rate structure under bond pending final rate determination was first raised and could have been effectively dealt with, the MPSC failed to act, because, as it stated in the answer to the October 6 complaint, it [was] unaware of any statutory authority empowering it to so act. However, we are mindful that there is a serious equitable problem of delay both in increasing and decreasing rates. In our opinion, this is a proper subject for consideration by the Legislature which has already tried to fashion a solution by establishing a partial and immediate rate request (§ 6a) and setting a nine-month time for MPSC action [1972 PA 300; MCL 460.6a(3); MSA 22.13(6a)(3)]. The Legislature in setting up a suitable procedure could also provide prudent safeguards as to when the procedure should be used. VII. REMEDY Having determined that the Court of Appeals and Judge Hotchkiss erred in holding Judge Salmon had general equity or statutory authority to set rates, we must now consider whether it is equitable to allow appellants' request that Consumers refund from October 22, 1969, the effective date of Judge Salmon's order, to the April 20, 1970 date of the MPSC's final rate order the revenues collected over and above the prior rates. Weighing the equities we must begin with the fact favoring appellants that technically Judge Salmon acted unlawfully in permitting the higher rates to be collected. But, on the other hand, we must consider (1) that MPSC had already determined that Consumers was entitled to higher revenues, (2) that MPSC in its final rate order of April 20, 1970 purported to make the new higher rates retroactive to October 22, 1969 (of course, this was contrary to law but it does show MPSC's opinion as to the equities), and (3) that this was the first time MPSC had not simultaneously granted new rates with the finding of revenue shortage. Balancing these equities, we are compelled to conclude that the appellants were not unjustly disadvantaged economically. Furthermore, we must recognize that all this happened 12 years ago and it is not too easy to put Humpty Dumpty together again. The cost and effort of distribution would be altogether disproportionate to the advantage of relatively small checks to subscribers. The excess collections were in the amount of approximately $6.6 million. There were over a million electric ratepayers. As a consequence, the average check without interest would be less than $6.50. Furthermore, because of the mobility of our population, many subscribers would not be found, despite the special records which were kept, and others only at excessive cost. In sum, we hold that, balancing the equities, we do not find a persuasive case to order the requested refund. Lex neminem cogit ad vana seu inutilia peragenda. The law compels no one to do vain or useless things. Black's Law Dictionary (4th rev ed), pp 1056-1057. See Sir Anthony Main's Case, 3 Coke, Part 5, pp 20b, 21a (1596). Cf. Chases's Blackstone Commentaries (3d ed, 1892), pp 701, 1071. Michigan has long recognized that the law does not require the doing of a useless thing. Friedman v Winshall, 343 Mich 647, 654; 73 NW2d 248 (1955). To order a refund at this late date would be a vain and useless act. The order would result in prohibitive costs and most likely could not be effectively carried out.