Court Opinion

ID: 9420299
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:53:49.98432+00
Date Added: 2024-06-11T17:22:23.937625
License: Public Domain

Mr. Justice Frankfurter,
concurring.
While agreeing in substance with Mr. Justice Douglas’ opinion, because of the conflict of views to which the case has given rise I deem it desirable to spell out with particularity what I regard as the controlling considerations.
1. The controversy concerns the proper disposition of a fund impounded in the Court of Appeals by virtue of the court’s suspension of a rate reduction order of the *585Federal Power Commission. Interstate paid into the registry of the court the sums collected by it in excess of the rates fixed by the Commission. After the order was finally sustained Interstate moved the court for distribution of the fund to the three companies which, as customers of Interstate, paid the unlawfully exacted amounts. The motion was supported by the three purchasers from Interstate; it was resisted by the Federal’ Power Commission which asked that distribution be made to the ultimate consumers; it was also resisted by the City of Jackson and by the regulatory commissions of Illinois and Missouri, which likewise urged that distribution be made to the ultimate consumers within their respective territories. One of Interstate’s purchasers, United Gas Pipe Line Company, although intervening as a claimant, advised the court that it would pass on its share of the refund to the Memphis Natural Gas Company, to which United had resold the gas purchased from Interstate.
2. The court below thus had before it claims upon the fund by two immediate purchasers from Interstate, which asserted their right to the amounts paid into the fund by them, by a third purchaser from Interstate which made claim upon the fund but merely as a conduit for its passage to a subpurchaser, and by public agencies — national, state and municipal — which urged that the entire fund be distributed to the ultimate consumers.
The respondents — Interstate and the three immediate purchasers from it — basically rely on Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U. S. 531, in urging that the fund should go to the immediate depositors from whom it was found to have been wrongfully exacted. They deem that case to be the foundation of our decision in Central States Electric Co. v. City of Muscatine, 324 U. S. 138. The Government on the other hand asks that the Muscatine case be overruled and that the fund should go to the ultimate consumers.
*586In the Muscatine case this Court rejected the notion that as between a utility like Interstate and its immediate purchasers a rate reduction makes the distributors mere conduits of the reduction for the exclusive benefit of the ultimate consumers. In short, the rationale of the Muscatine case is that that which is in fact not true in the process of rate-fixing ought not to be erected into a principle of law merely because the effect of a rate reduction is postponed through an exercise of the right to judicial review afforded by the Congress.
3. It would, therefore, appear to be clear that the judicial duty is to deal fairly with a trust fund held to await the outcome of judicial review to the end that it may be distributed on the basis of what would have taken place had the Power Commission’s order gone into effect at once.
The task, then, for the Court of Appeals is to reconstruct, as far as it can possibly be done, what would have happened had no fund accrued. Reasons of equity produced the fund; equitable considerations must determine its distribution. The governing principle is that of unjust enrichment. Since the task of the court is to place the parties in the position in which they would have been had there not been a postponement of the effective date of the rate reduction, it is now the duty of the court to make that retrospective determination not by unfounded assumptions erected into rigid legal rules, but by an ascertainment of what actually would have happened contemporaneously had purchasers from Interstate obtained their gas at the lower rate.
4. A utility is entitled to charge a reasonable rate. It would be dealing with a fiction and not a fact to hold as a matter of law either that the immediate purchasers from Interstate should keep the benefit of the reduced rate or that it should all go to the ultimate consumers. Whether the three purchasers or the intervening distribu*587tors are entitled to any part of the reduction depends on the ascertainable condition of the three purchasers from Interstate and the intermediate purchasers from them. A merely compensatory rate below which no rate may be fixed by a regulatory commission may not be a reasonable rate. See Brandeis, J., in Southwestern Bell Telephone Co. v. Public Service Commission, 262 U. S. 276, 296. For various reasons a utility may charge, as is well known, less than what as a matter of law it could be compelled to charge. On the other hand, it may charge the maximum of what is reasonable.
To distribute the entire fund among the immediate purchasers from Interstate may give them a complete windfall, since they might have been compelled, under their duty to charge only a reasonable rate, to reduce their rates so as to keep none of the Interstate reductions. Since all these purchasers are subject to regulation by the Power Commission, the Power Commission could have ordered such rate reductions in whole or in part. On the other hand, to take it all away from them now might work an injustice because they might have been allowed to keep at least part of the reduction. As to the intermediate purchasers that were not subject to the Federal Power Commission, the allowable retention of any part of a reduced rate from a distributor would have turned contemporaneously on state law. To deny both these classes of the intermediate purchasers the right to establish just claim against the fund and to distribute it all among the consumers, moreover, would inevitably leave a sizable unclaimed amount, and this, of course, would have to go to the depositors as the residuary claimant — it would have to go, that is, to Interstate, the one party least entitled to any of the fund.
These arbitrary alternatives — to distribute the whole fund to the immediate purchasers from Interstate or to distribute it all to the ultimate consumers — have at least *588the support of logic though not of justice. A suggested compromise — to go beyond the immediate purchasers and at the same time stop short with those purchasers over whom the Federal Power Commission has authority— is said to be justified by the fact that a federal court cannot engage in rate regulation. This suggestion has the support neither of logic nor of justice. If a federal court is barred from inquiring, because such an inquiry amounts in effect to rate regulation, what would have been the consequences to all those affected had the reduction of Interstate’s rate gone into immediate effect, rates administered by the Federal Power Commission should be no more open to such an inquiry than are those beyond the power of the Commission. And if it would be unjust to let an immediate distributee which had passed on the higher rate to its purchasers retain the benefit of the reduction, it would be equally unjust to let any succeeding distributee which had done the same thing enjoy the benefit merely because it was the last distributee subject to the Commission’s jurisdiction.
At all events, in preventing unjust enrichment a court of equity is not exercising the functions of rate-making; it is neither awarding reparations for the past nor fixing a future schedule as does a rate-regulating body. Granting that a federal court does not have the power to regulate rates, it does not follow that in discharging the duty to distribute a fund of its own creation it is barred from an inquiry which has some aspects — though I believe very minor ones — that would also appear in a rate proceeding. In short, issues that may be pertinent to a rate investigation before a regulatory commission are not therefore beyond the power of judicial inquiry when they arise in a totally different relation.
5. Accordingly, the task for the court below is to determine in 1949 how the Interstate rate reduction would have affected all the intermediate distributors in ’43 and *589’44 had it not been suspended by the court’s injunction. The Court of Appeals has inherent powers to bring to its aid all effective means to discharge this task. This Court, in Ex parte Peterson, 253 U. S. 300, showed the resources available to our District Courts even in an action at law when due regard must be had for the requirements of the Seventh Amendment. The more clearly available are procedures for doing justice where a court of equity is called upon to distribute a trust fund of its own creation.
In the light of the foregoing, the Court of Appeals should ask the Federal Power Commission for an advisory report as to what the Commission might have determined had it in the original proceeding for the reduction of the rates of Interstate exercised its power to bring in all the parties. There is nothing novel in this. District Courts may call upon the Federal Trade Commission to help shape decrees in Sherman Law cases. To be sure, the Clayton Act explicitly so provides. But a court of equity has inherent powers to invite such help from a great agency of the Government. While the Federal Power Commission could, if it chose, decline to render that help, it is inconceivable that it would do so. As to the intermediate purchasers, subject not to the Power Commission but to State or city regulation, the local agencies could be similarly resorted to for aid in the ultimate problem before the lower court of distributing a commingled fund as to which none of the interested parties can fairly be said, as a matter of law, to have an obvious, demonstrated claim.
Various obstacles are conceived to stand in the way of the lower court’s fulfillment of this task. But it is, to say the least, premature to conjure up abstract difficulties which, as a practical matter, may evaporate in the light of the informed advice which these various regulatory agencies may be able to furnish readily on the *590basis of their available records of the financial condition of the utilities subject to them. It will be time enough to distribute the fund by some makeshift rule of thumb if what is concededly a rule of intrinsic fairness should be found judicially unenforceable. Accordingly, I would remand the case to the Court of Appeals to take steps consistent with the foregoing views.
By Mr. Justice Jackson.
Mr. Justice Burton
and I view this case in a different light than do any of our brethren but we have joined in the judgment and the opinion of Mr. Justice Douglas because we deem it important that instructions to the court below carry the concurrence of a majority of this Court. We agree with much but not all of that opinion and where our views differ we are closer to that opinion than to other views expressed here. We repeat our concurrence so that there may be no misunderstanding but wish also to express for the record our individual views.
The way this case appears to us is this:
1. The three pipe-line companies whose excessive payments made up this fund may not, under the terms of the impounding order, have an absolute right to recover it. However, since this Court found that the money was illegally exacted from them, it would seem to make at least a prima jade case for returning it to their possession. The minimum to which they are entitled is a chance to be heard as to whatever claim they may have to it. As these companies are subject to the Federal Natural Gas Act, a federal court might properly weigh their claims under federal law.
2. Assuming, however, what is not improbable, that none of the pipe-line companies establishes a claim to the fund, the next in right to receive it would be their customers, the local distributing companies. The latter *591are under protection of federal law as to the rates which may be exacted from them by the pipe-line companies but are in no respect under federal law as to the rates they may charge customers. If all of the federal power exerted in the Natural Gas Act had been exercised by the Federal Power Commission, it could not reach or control their customer relations. We do not see, therefore, how a federal court in this litigation can derive from the Act any greater power to enter the local field with refunds than the Power Commission had to enter it for rate-making. There are many legal and practical reasons why the court’s function should not be expanded beyond the point where Congress ended the functions of the Power Commission.
3. The manner and amount by which any repayments to distributing companies would be reflected in reduced rates to consumers, and therefore in rebates, is exclusively for state law. Twenty-one of these distributing companies are involved and they operate in eight states, each with its own principles to govern local rate-making and separate authorities to apply them. We solve no problem by saying that computation of this refund is not rate-making. Of course it is not, but it is so like unto it that no one suggests that any body of law except that of rate-making is applicable. Disguise it with what sophistry we will, the disposition of refunds as between operating companies and customers must be generally based on the local law of rate-making or on no law at all. Some of these companies and their customers are located within the territorial jurisdiction of the Court of Appeals for the Fifth Circuit; others are in the Sixth, Seventh and Eighth Circuits. I know of no legal or practical justification for requiring the Fifth Circuit Court of Appeals to undertake interpretation and application as an original matter of the laws of eight states, several of them beyond its jurisdiction.
*5924. The application of these funds, if they are held to go to the local distributing companies, present difficult questions of policy which it is the responsibility of the states to resolve in their own ways. The federal court should not undertake to resolve them, even if they were less complex. These problems are not solved or evaded by saying that refunds shall go to consumers rather than to the companies. It oversimplifies these problems to treat consumers in the abstract as a class all alike. And it does not dispose of the problems to declare that refunds should be on “equitable principles” as if there were a defined and accepted body of principles of equity on this subject. Equity in the historical sense — equity jurisprudence — has no guidance to give beyond maxims, such, for example, as “equality is equity.” But here, what is equality? Of course, what no doubt is meant is that the court should apply a sort of natural justice based on popular notions of right dealing. But this does not answer some of the concrete questions which someone must face in final disposition of these funds. I shall mention but few.
At the very outset one is faced with the question as to what is an “equitable” basis of refund as between industrial and domestic consumers. Direct sales to industrial consumers by the three pipe-line companies amounted to 63% of the total for Mississippi River Fuel Company, 18% in the case of Southern Natural Gas Company, and 11% for United Gas Pipe Line Company. In addition to this, other industrial consumers may be served by local distributing companies. The Federal Power Commission proposal, which this Court seems to think should prevail, is that refunds both to industrial and domestic consumers be calculated by dividing the money in proportion to feet of gas sold to each one. On this basis, the Power Commission’s exhibit proposes a refund to direct industrial consumers alone of over a million dollars from this fund. The Commission does *593not tell us the prices paid by various classes of consumers. But it is common knowledge that, for a variety of reasons, industries get a much lower price per m. c. f. than domestic users. If we assume it is 50%, then the refund would repay industrials twice as large a proportion of what they have paid for gas per m. c. f. as it would household users. Is this “equity”? In my dissent in Federal Power Commission v. Hope Natural Cas Co., 320 U. S. 591, I pointed out the uneconomic use of gas in industry and the waste and exhaustion of irreplaceable natural resources that it causes, and the great differential that exists between their low contract price and the price paid by domestic users. I have great doubt whether the industrial users have any just basis for participating in this refund; but if they could, and they certainly are entitled to try, their share should not be greater than their proportion of the revenues contributed, rather than of their proportion of the consumption. The latter measures only the benefits they already have derived from exhausting the Nation’s supplies, not at all what they have contributed to the fund. This Court refused to consider these equities, as did also the Power Commission, in the Hope case. Why not then leave the states free to solve the issue? Some of the states may have an intelligent policy with reference to the rapid depletion of our gas reserves, vis-a-vis domestic and industrial consumption, and the relation of price to uneconomic uses. The Federal Government has none.
The Power Commission has furnished a tabulation showing the share of each local distributing company under its theory. But it has not provided any of the data which would disclose the magnitude and complexity of the task it is asking us to visit upon the Court of Appeals by directing it to go beyond this and distribute each company’s share among its consumers. By reference to Moody’s Manual, however, we can learn the *594approximate number of customers served by each company. Then by applying the Power Commission’s tabulation of the share of refunds, it would appear that refunds for some companies would be so trivial that a state supervising authority might conclude that to cover this refund into the current revenues of the operating company for whatever effect it might have on its present or future rates would be a more sensible procedure than to spend it in expense of special proceedings to refund to consumers. For instance, Arkansas-Louisiana Gas Co. serves 142,481 customers in 109 communities. The Power Commission allocates it $20,911, or an average 150 per consumer. The Illinois Power serves 116,000 customers in 56 communities and is allocated $50,065, or about 430 per consumer. Birmingham Gas serves 61,000 consumers in 9 communities and is allocated $30,133, making an average refund of about 490.
The foregoing estimate of consumer refunds assumes an equal amount to each consumer. Another permissible basis, and I should think, a fairer one where substantial amounts were involved, would be a refund in ratio to the bills paid for gas. The Power Commission, however, if consistent, would use another method and refund in proportion to the feet of gas purchased by the consumer. Different local conditions precipitate some nice questions in applying any fair method as between consumers. From Moody’s Manual, for example, we learn that one of the largest of the distributing companies, the Atlanta Gaslight Co., which serves approximately 133,000 consumers in 28 communities, has a graduated scale of rates, so that consumers pay different rates for gas consumed in different quantity brackets. I should think the practical effect of its schedule would be that a very large consumer would make an average payment much less per thousand feet than would a moderate household consumer. Equality of refund may not be equality of treatment. It will take *595more than equalitarian generalities to get this cash into consumers’ hands. Is not the manner of refund under such local conditions one to be worked out by local authorities rather than the federal court of a distant circuit?
The problems do not end here. Consumers during what period are entitled to refund? Certainly the rate reduction which caused this fund to accumulate could not in normal course have reached local retail consumers until sometime after reduction in wholesale rates, and the period would differ according to local conditions. The individuals who are entitled to refund, for whatever period may be adopted, must be identified and questions settled as who is entitled to the refund of a deceased consumer, what becomes of the share of one who has removed or is unknown. Disputes between landlord and tenant, husband and wife, and many other questions will arise; all of'which are for local authorities.
For these reasons it seems to us that the functions of the federal court end when it has granted these refunds to the last purchaser whose purchase price the federal authority can lawfully reduce. This would be the distributing companies. From there on it is a local problem with which neither the Power Commission nor the court has any legitimate concern. The machinery of some of the states may be somewhat inadequate for dealing with the problem, but that does not, in our view, warrant usurpation of their functions.
However, for reasons stated at the beginning of this opinion, Mr. Justice Burton and I have joined the judgment and opinion of the Court.