Court Opinion

ID: 5046783
Source: CourtListenerOpinion
Date Created: 2021-10-01 07:25:38.078642+00
Date Added: 2024-06-11T08:18:49.155219
License: Public Domain

STERNBERG, Justice
(dissenting).
The application of South Central Bell Telephone Company for an increase in intrastate telephone rates sufficient to increase its income by $33 million per year was denied by the Public Service Commission. It did, however, approve a rate increase sufficient to generate $15 million per year, which is less than one-half of the amount sought. The respondent, in a proceeding in the Franklin Circuit Court, secured a temporary injunction against putting the order of the Public Service Commission into effect. Interlocutory relief in the form of an injunction is authorized by KRS 278.410(3). As a result South Central Bell is able to collect intrastate telephone rates sufficient to generate the full increase which it seeks. The Commonwealth is here, under CR 65.07, seeking to have the temporary injunction dissolved.
Upon a final disposition of an appeal from an order of the Public Service Commission, the circuit court may not set aside or vacate it except upon a showing that the order is unlawful or unreasonable. KRS 278.410. We are not at this time confront-ad with the final disposition but'only with the propriety of the issuance of a temporary injunction. A temporary injunction is designed merely to hold a status quo until the case can be decided on its merits. Curry v. Farmers Livestock Market, Ky., 343 S.W.2d 134 (1961). The right to a temporary injunction is addressed to the sound discretion of the trial court, and this court should not set aside a temporary injunction unless it is clear that the trial court abused its discretion. Oscar Ewing, Inc. v. Melton, Ky., 309 S.W.2d 760 (1958). The trial judge filed findings of fact and conclusions of law in which he found, among other things, the following:
“5. The Company, pursuant to KRS 278.410, filed this action for review of the Commission’s order claiming that the said order was arbitrary, unjust, unlawful and unreasonable for a number of reasons. It is asserted that the order fails to permit the Company to charge rates which will produce revenues necessary to meet its operating expense, service its debt and earn a rate of return that will attract capital and otherwise maintain its financial integrity; it does not produce the overall rate of return of 8.95% and the rate of return on equity of 11% which the Commission finds necessary to attract capital and maintain the financial integrity of the Company.
6. The Company will suffer immediate loss unless enforcement of the Commission’s order is restrained pending a final determination of this matter, in that the Company will be permanently deprived of revenues from the rates finally allowed, to the extent such rates may exceed the rates prescribed by the Commission because such rates could not be retroactively collected prior to such final determination.
7. Restraining enforcement of the Commission’s order will maintain the status quo. The rates placed into effect by the Company on September 3, 1975, pursuant to KRS 278.190(2), are presently being charged, are subject to refund as provided by the Commission’s order, and the relief requested will not require any other party hereto to change its course of action.
8. The equities justify granting the relief requested. Restraining enforce*934ment of the Commission’s order will secure the benefits of the Company’s appeal if it is ultimately successful, but will not prejudice the Commission or the other parties hereto. The Company’s ratepayers are adequately protected because, if the Commission’s order is finally upheld, they will be entitled to refunds of the amounts collected in excess of the rates prescribed by the Commission together with interest thereon, as provided by its order, and the Company is maintaining its records in such manner as will enable it to make such refunds.”
If the findings of fact and conclusions of law are not supported by clear and convincing evidence of substance, then and in that event the trial judge has abused his discretion and the temporary injunction should not be permitted to stand. On the other hand, the temporary injunction which was issued by the Franklin Circuit Court is wholly justified if it is shown by the evidence that:
1. The rights of South Central Bell Telephone Company will be violated by the order of the Public Service Commission, and
2. It will suffer immediate and irreparable injury, loss, or damage pending a final judgment on the action, or
3. The acts of the Public Service Commission will tend to render a final judgment ineffective. (CR 65.04).
The respondent is entitled to a rate that will yield a fair and reasonable return. The rate which yields less than this is unjust, unreasonable, and confiscatory. 64 Am. Jur.2d Public Utilities, § 135. In Citizens Telephone Co. v. Public Service Commission, Ky., 247 S.W.2d 510 (1952), this court, in the course of its opinion, wrote:
“As said by the Supreme Court in the Hope case (Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333), rates which enable the utility to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed, cannot be condemned as invalid, even though they might produce only a meagre return on the so-called ‘fair value’ rate base. Obviously, in times of inflated values, such as the present, a low rate of return based on reproduction cost new will adequately supply the financial needs of the utility.”
I construe the court’s findings as being an affirmative finding from the evidence and from the record that the rates which the Public Service Commission had authorized are not sufficient to produce an overall rate of return and a return on equity sufficient to attract capital and maintain the financial integrity of the company. I further construe the court’s findings to be that the company will be unable to collect from many of its customers the difference between the amount it is authorized to collect pursuant to the order of the Commission and the amount which it should have been permitted to collect. The rationale, as I construe the court’s findings, is a determination that without this increase the respondent will not collect sufficient income to meet its operating expenses, service its debt, and earn a justifiable profit. As a result thereof, the respondent may not be able to provide proper, competent, and efficient service. Not only does this constitute an emergency condition, but it demonstrates that the credit of the company and its operations will be materially impaired by a failure to permit the rate to become effective.
It does not follow and it is not this writer’s purpose to leave the impression that in every case where the Public Service Commission approves a rate less than that requested, the applicant should be permitted to charge the requested rate until the case has been finally decided and the permanent rate established. For example, the rate increase may be less than the amount sought, yet engender sufficient income so that the company may satisfactorily carry out its operations without jeopardy to its ability to compete. Each case would have to stand on its own bottom. We must bear *935in mind that a sound financial structure of a public utility is necessary for its safe and satisfactory operation. The testimony of the witnesses for the respondent demonstrates that its financial condition, if the order of the Public Service Commission is put into effect at this time, may injuriously affect its financial structure.
The findings of the court portray the immediate irreparable and serious injury. True it is that the trial judge did not find that in the event the respondent is not permitted to charge the full rate of increase, it will be bankruptcy bound. Such a condition is not essential to justify the temporary injunction.
In the landmark case of Oscar Ewing, Inc. v. Melton, Ky., 309 S.W.2d 760 (1958), there is set out the guidelines to be considered in granting or denying a temporary injunction. In considering the propriety of the issuance of a temporary injunction, we should bear in mind, among other things, that it does not justify a determination of the issues that are being litigated and there is no appeal from an order granting a temporary injunction. The prime consideration is threefold:
1. Are the applicants for the temporary injunction suffering immediate irreparable and serious injury at the present time, or will they suffer such injury pending a final decision?
2. Are the applicants seeking to maintain the status quo, or are they requesting mandatory relief which would require the defendant to change his course of action?
3. Do the equities of the situation justify the granting of such extraordinary relief at this time?
We need not be solely guided by the irreparable injury requirement. If, upon consideration of the whole case, the equities of the parties justify the temporary injunction, the court is fully justified in its issuance. The respondent, prior to the issuance of the temporary injunction, posted a bond with the trial court in the sum of $250,000. In the event the full increase sought by respondent is not finally allowed, each customer will be refunded any excess that he has been required to pay with interest. In those cases where a customer who is entitled to a refund cannot be located, the refund will escheat to the Commonwealth of Kentucky; it will not inure to the benefit of the respondent.
In Mountain View Rural Telephone Co. v. Interstate Utilities Co., 55 Idaho 86, 38 P.2d 40, the Supreme Court of Idaho had before it a contest of telephone rates. Appellant, in its petition for a stay, alleged as follows:
“That if a stay of said order is not made by the Supreme Court of the State of Idaho, said Interstate Telephone Company, appellant, will suffer immediate and irreparable damage, for which it cannot be compensated because it will be necessary to change its system of accounts and billing to users of telephone service of the class involved and defined by said Order, in that the users of telephone service will be billed at reduced rate; that such users are located at distant and isolated points over a wide territory in Northern Idaho, and should said order thereafter be reversed or modified it would be necessary to collect an increased rate and in numerous cases it would be difficult for said Company to contact said user, and if legal proceedings became necessary there would be a multiplicity of suits over a small sum, with expense and costs to the Company entirely disproportionate to the amount involved. In a great many cases, also there is grave doubt whether or not collection might be made by legal process.”
In considering the charge, the court said:
“There is, however, merit in the contention of the company that it would suffer irreparable damage for the reason that the telephone users are located at distant and widely separated points in Northern Idaho and in the event of a reversal or modification of the order it would be necessary to collect an increased rate; that in numerous cases it would be difficult to contact such users; and if *936legal proceedings became necessary, there would be a multiplicity of suits over small sums, with expense and cost to the company entirely disproportionate to the amount involved, and in many cases grave doubt as to collection.”
In disposing of the attack on the temporary injunction, the Supreme Court of Idaho stayed the restriction of the Commission, which, in the case at bar, would be the same as continuing the temporary injunction in full force and effect until further orders of this court.
In the subject action, the trial court made findings of fact which this court will not set aside unless clearly erroneous, and we are charged with the responsibility of giving due regard for the opportunity of the trial court to judge the credibility of the witnesses (CR 52.01). We must bear in mind that a finding by this court in favor of the respondent would not be an adjudication of its entitlement to its full rate increase. This is only an interlocutory matter and the full and final determination of the rights of the parties is yet to be made by the trial court.
I would deny the motion of the Commonwealth to dissolve the temporary injunction.