Opinion ID: 292748
Heading Depth: 1
Heading Rank: 7

Heading: the equities of restitution in the instant case

Text: 144 We have concluded that the cancellation order of the Interstate Commerce Commission made it unlawful for the carriers to collect charges under that tariff following the effective date of the order, that the effect to the order was to compel a reduction of rates to the preexisting level, and that the carriers can be compelled to make restitution for higher rates charged in violation of the order which are collected by virtue of a court's restraint of an order not proved to be invalid. This does not dispose of all the problems in the instant case, for the carriers contend that there was no wrongful restraint in this case, and that the decision of the trial court that there are no equitable grounds for relief is adequately supported by the record. 145 The contention that the restraint in this case was not wrongful is based on the fact that there was no final decision on the merits of the validity of the Commission's cancellation order. Since there was no such final decision, the carriers argue that the possibility remains that the Commission's order was invalid, that they were entitled to maintain the challenged tariffs, and consequently that the shippers would not have been entitled to restitution. Thus they conclude that without such a final determination on the merits, there can be no legal basis for awarding restitution. The fundamental error in this analysis is the tacit assumption that because they chose to challenge the Commission's order in court, that order somehow became less final or its validity became open to question. This assumption is erroneous. 146 'The Commission's order does not become suspect by reason of the fact that it is challenged. It is the product of expert judgment which carries a presumption of validity. And he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid.   ' Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 602, 64 S.Ct. 281, 288, 88 L.Ed. 333 (1944). 147 See also Interstate Commerce Commission v. City of Jersey City, 322 U.S. 503, 512-513, 64 S.Ct. 1129, 88 L.Ed. 1420 (1944). The Commission's order was at all times binding upon the carriers until they successfully concluded a suit proving its invalidity; and restitution may be ordered for higher rates collected in violation of the order by virtue of the court's injunctive process in the absence of a final decision setting aside the order. This conclusion is supported by the following reasons. 148 First of all, prior case law is consistent with this conclusion. In the Arkadelphia case, discussed above, 249 U.S. 134, 39 S.Ct. 237, 63 L.Ed. 517, the carriers made a similar argument. There the carriers' suit against the state rates was dismissed without prejudice because they failed to sustain their burden of proof to show the invalidity of the rates. When restitution was then ordered, the carriers argued that the dismissal without prejudice left the rights of the parties in doubt. But the Supreme Court held that restitution was proper so long as the state rate order remained in effect. 149 Another analogous situation was present in Ex parte Lincoln Gas, 256 U.S. 512, 41 S.Ct. 558, 65 L.Ed. 1066, also discussed above. There a district court upheld the validity of a municipal gas rate ordinance in 1915, but stayed its operation pending appeal. In 1919, the Supreme Court affirmed the decision, with the modification that it be without prejudice for the period following 1915, taking judicial notice that increased labor costs and returns on capital following World War I might render it noncompensatory. On remand, restitution was ordered for the 1915-1919 period during which the injunction was in effect pending appeal. This was held proper on the grounds that the ordinance was presumptively valid until the companies successfully concluded a suit against it. 150 This conclusion is also consistent with the generally adopted position that the voluntary dismissal of an injunction suit by a plaintiff without the consent of the defendant is a determination of the merits of a controversy so as to render the plaintiff and his sureties liable on the injunction bond. See 'Annotation: Dismissal of Injunction Action or Bill without Prejudice as Breach of Injunction Bond,' 91 A.L.R.2d 1312 (1963). Here the carriers by their own actions rendered the issues in the main suit moot and procured the dismissal. They received the benefit of the temporary restraining order without ever proving the Commission order invalid; such proof is a prerequisite to the absolution of liability for those benefits. 151 It is also significant in this case that while there has not been a determination on the merits of the ICC order, there has been a determination that the carriers were not entitled to injunctive relief from the order. The denial of the interlocutory injunction on the grounds of the 'remote possibility' of the carriers' success on the merits is clearly a decision that the carriers should be required to comply with the Commission order until they successfully completed a suit against it. The standards discussed above with respect to stays of administrative agency orders apply equally to temporary restraining orders and interlocutory or temporary injunctions. Where a party fails to prove grounds sufficient for the grant of an interlocutory injunction, he at the same time shows that the temporary restraining order should not have been granted, at least to the extent of rendering him liable in restitution for benefits received under the temporary restraining order. The carriers in Arkadelphia argued that the denial of the permanent injunction did not determine that the temporary injunction was wrongfully issued. The Supreme Court held that the failure to carry their burden of proof on the permanent injunction was itself sufficient to show that the temporary injunction should not have been allowed. So here, the failure to carry the burden of proof on the interlocutory injunction shows that the temporary restraining order should not have been issued, in the absence of a later decision in the carriers' favor on the merits. 152 It is now necessary to consider the equitable grounds of the Three-Judge District Court's decision denying restitution. It should be pointed out that nothing in that opinion suggested that the court felt it was without power to award restitution should the circumstances warrant. Rather, its decision rested on its assessment of the equities of the situation. In this respect, we think the decision was clearly erroneous in four aspects. 153 First of all, it is quite clear that the Three-Judge Court proceeded on the assumption that if restitution were to be awarded in this case, a decision on the merits of the ICC order would be necessary. The Court's well-founded distaste for deciding moot issues more than likely affected its determination of the merits of the counterclaim. But in fact, as we have shown above, the shippers' right to restitution did not require a determination on the merits of the order. Once the Three-Judge Court decided that issue was moot, its statutory function was at an end and the case should have been referred to a single judge for determination of the counterclaims. Public Service Commission of Missouri v. Brashear, 312 U.S. 621, 61 S.Ct. 784, 85 L.Ed. 1083 (1941). 154 Secondly, the Court found that the Commission had never determined the rates to be unlawful. This finding probably was a product of the carriers' insistence that the failure to sustain the burden of proof under 316(g) does not render the tariff unlawful. But we have held above in the third part of this decision that such a failure, combined with a cancellation order does render the tariff unlawful. This is of course to be distinguished from a finding of unlawfulness because of some substantive violation of the Act, but nevertheless, the tariff was unlawful as of the cancellation date of the Commission order and remained so until the carriers proved the order invalid. 155 Thirdly, the court suggested that to order restitution would imply an affirmative determination of the Court that the rates were unjust and unreasonable. Such a determination is within the primary jurisdiction of the Commission. But awarding restitution would not imply such a finding. It would merely recognize the effect of the Commission order, which we have shown to require a reduction in the carriers' rates in the context of this case. Restitution is the proper remedy to return the parties to the position they would have been in had the Commission's order not been judicially restrained. 156 Finally, the Court was understandably influenced by the Commission's order of September 30 postponing compliance until October 11. However, this order does not and cannot affect the shippers' right to restitution for the period of the court's temporary restraining order. We may note here that the Commission's explanation of its order is not entirely satisfactory. When the carriers applied for their temporary restraining order on September 9, they had only four more days until the compliance date of September 13. The Commission at that point had not considered it justified to extend the compliance date any further. When the interlocutory injunction was denied on September 24, the temporary restraining order was extended for five more days until September 29. Thus the carriers had at least one more day to comply with the order than the Commission had granted, and actually had had a total of two weeks extra. For the Commission to contend that its September 30 postponement was entered solely because of the court's restraint simply does not make sense. Nothing in the Court's order compelled such a result. However, we need not be concerned here with the reasons for the Commission's action, for it is quite clear that the order was not retroactive, and hence cannot affect the restitutional rights of the parties during the period when the court had jurisdiction of the case. A similar situation arose in Inland Steel Co. v. United States, 306 U.S. 153, 59 S.Ct. 415, 83 L.Ed. 557 (1939), where the Commission stayed an order that was being reviewed in the courts. Once the order was affirmed, the parties contended that the Commission's stay prevented restitution. But the Supreme Court held that 'since the court had exercised jurisdiction to review and suspend the Commission's report and order, the administrative body was without power to act inconsistently with the court's jurisdiction.   ' Id. at 160, 59 S.Ct. at 419. And restitution was proper in spite of the stay order. 157 The decision is reversed and remanded for further proceedings consistent with this opinion.