Landon v. Public Utilities Commission of Kansas

• Decision Date: 03 June 1916
• Docket Number: 136-N.
• Citation: 234 F. 152
• Parties: LANDON et al. v. PUBLIC UTILITIES COMMISSION OF KANSAS et al.
• Court: U.S. District Court — District of Kansas

234 F. 152

LANDON et al. v. PUBLIC UTILITIES COMMISSION OF KANSAS et al.

No. 136-N.

United States District Court, D. Kansas, First Division.

June 3, 1916

May 26 1916.

John H Atwood, of Kansas City, Mo., Robert Stone, of Topeka, Kan Chester I. Long, of Wichita, Kan., and T. S. Salathiel, of Independence, Kan., for complainant receiver.

H. O. Caster and Fred S. Jackson, both of Topeka, Kan., for defendant Public Utilities Commission of Kansas.

William G. Busby, of Carrollton, Mo., and Alex Z. Patterson, of Jefferson City, Mo. (James D. Lindsay, of Jefferson City, Mo., on the brief), for defendants Public Service Commission and Attorney General of Missouri.

J. A. Harzfield and A. F. Evans, both of Kansas City, Mo., for defendant Kansas City, Mo.

William E. Stringfellow, of St. Joseph, Mo. (Olin, Butler, Stebbins & Stroud, of Madison, Wis., and Culver & Phillip, of St. Joseph, Mo., on the brief), for intervener St. Joseph Gas Co.

J. W. Dana and C. E. Small, both of Kansas City, Mo., for Kansas City Gas Co. and Wyandotte County Gas Co.

T. F. Doran, of Topeka, Kan., for Consumers' Light, Heat & Power Co.

Charles A. Loomis, of Kansas City, Mo., for Ottawa Gas & Electric Co. and other distributing companies.

Charles L. Faust, of St. Joseph, Mo., for city of St. Joseph, Mo.

Charles Blood Smith, of Topeka, Kan., for Fidelity Title & Trust Co.

A. M. Baird, of Carterville, Mo., for city of Oronogo, Mo.

E. F. Cameron, of Joplin, Mo., for city of Joplin, Mo.

Before SANBORN, Circuit Judge, and CAMPBELL and BOOTH, District judges.

SANBORN Circuit Judge.

The receiver of this court and of the district court of Montgomery county, Kan., brings a dependent bill in this court in the original suits brought by a creditor and the trustee for mortgage bondholders to take possession of the property of the Kansas Natural Gas Company and that of some other defendants, to appoint receivers of that property, administer the property, foreclose the mortgage, dispose of the property, and distribute its proceeds, first to the lienholders; second, to the unsecured creditors; third, to the stockholders. This receiver claims that, while he is operating the property for the benefit of the beneficiaries, the commissions of Missouri and Kansas are fixing rates which are and threaten to be unreasonable, noncompensatory, confiscatory, and to interfere with the interstate commerce in natural gas which he is conducting. The bill is challenged, and his right to an injunction from this court to prevent these alleged wrongful acts is objected to, on the ground that this court has no jurisdiction to issue an injunction to prevent these alleged wrongful doings.

On February 14, 1913, this court had jurisdiction and complete control of all this property in the original suit to which reference has been made. The power is conferred and the duty is imposed upon every court in equity, which takes into its possession for administration and disposition the property of owners and lienholders, to exercise any power it has to protect that property from depreciation by the wrongful act of any person or party. Hence it was that, when this court originally took jurisdiction of this property in the original suits, it issued its injunction against all persons, requiring that they interfere not with any of this property. Hence it is that under the law, when a court of equity has taken possession of property for such purposes, a circle of segregation is drawn around it and the ordinary processes of the law cease to reach it. Neither attachment nor execution may seize one iota of the property, but all controversies concerning it, all claims to it, must be adjudicated upon application to the court which holds the dominion of the property for the beneficiaries. Such was the condition of this cause in this court on February 14, 1913. This court subsequently learned that the officials of the state of Kansas had brought a suit in the district court of Montgomery county, Kan., for the purpose of seizing the property of the Kansas Natural Gas Company, winding up that corporation, selling or disposing of or operating its property as the court should see fit, because it was alleged to have violated the anti-trust law of Kansas. When that fact was discovered, because the court in Kansas had the primary right to discharge its duty regarding this property, first, because the suit in that court was brought before the suit in this court, this court turned over to the receiver appointed by the Kansas court the possession, management, and control of that property until such time as it should renounce possession, and until it should have discharged its duty to the state of Kansas and to the owners of this property under the anti-trust law.

The fact then developed that the property in Kansas, the property in Missouri, and the property in Oklahoma constituted a unit, and that it should not be divided into its three parts and separately operated, without that very spoliation and destruction that is alleged may come from noncompensatory rates, without a depreciation of the value of the property and an impracticability of wise and beneficial operation. At this time the properties in Oklahoma and Missouri were still within the jurisdiction and complete control of this court, and the court in Kansas had not then and never has had any inherent power, nor could the state of Kansas give it any power, to take, manage, or control the property in Oklahoma or Missouri. It was in the power of this court at that time to order its receiver, Mr. Sharritt, to operate the property in Missouri and Oklahoma in harmony with the receiver in Kansas. It was in its power to appoint a master, and to direct that he should see that the receiver of this court should operate in that way. It was in its power to appoint the same man receiver that had been appointed by the Kansas court, and to direct him to operate in harmony with himself; and upon consideration of the facts and circumstances the court came to the conclusion that the wise method of operation was to appoint the same man whom the Kansas court had appointed receiver of the Kansas property its receiver of the Missouri and Oklahoma property, ancillary to the receivership in this court. The Kansas property was delivered over, because the Kansas receiver, the receiver appointed by the Kansas court, had the primary right to take it, to enable that court to discharge its duty, leaving the reversion of the property and the control of it, subject to that temporary operation of the Kansas court, still within the jurisdiction of this court. This court, therefore, appointed the same man who was the receiver of the Kansas court the receiver of this court of the Oklahoma and Missouri property. I say the Kansas receiver, because, although two receivers, I know, were appointed, one of them has deceased. It is more convenient to treat this matter as though there was only one receiver in Kansas then, as there is only one now.

Now, whenever it appears to the receiver of this court, or of any court, which has control or management of property of this character, that there is danger of its destruction or depreciation by the wrongful act of any one, it is the duty of that receiver to apply to the court, whose hand he is, to protect that property from such destruction or interference. And pursuant to that duty this receiver, whose only power over the Oklahoma and Missouri property is derived from this court, has applied to this court by this dependent bill to exercise its power to prevent the depreciation of the property in his possession.

It is the opinion of the court that under these circumstances, however desirous the court might be to renounce or avoid the exercise of power or jurisdiction, it cannot lawfully do so, and that, if the allegations of this bill are true (a question that of course must be hereafter determined), this court has jurisdiction to exercise all the power that it had in the beginning over the property in Missouri and Oklahoma, and over the reversion of the property in Kansas, to prevent the depreciation of any of that property by the wrongful acts of any one.

The court is also of the opinion that under section 21, chapter 238, of the Session Laws of 1911 of Kansas, in accordance with the opinion of the Supreme Court of Kansas, this is a competent court to which the receiver may apply for the purpose of determining whether or not the rates established by the commission in Kansas are compensatory, reasonable, or confiscatory, and that for this reason there is jurisdiction in this court to hear and determine the question suggested in the dependent bill.

It is urged that the receiver is estopped from applying to this court, because it is decided by the Supreme Court of Kansas as it is claimed, that he is not engaged in interstate commerce in that state, but in intrastate commerce. It is not necessary to determine the question of res adjudicata in order to determine the question of the jurisdiction of this court, because, if he is not engaged in interstate commerce, still if these rates are noncompensatory, unreasonable under the Kansas statute, or if they are confiscatory, thus in violation of the Constitution of the United States, the jurisdiction still inheres. It is said that in the Kansas case the receiver claimed that he was doing an intrastate business, while he now claims that he is doing an interstate business; but it is not inconsistent with the fact that he is doing an interstate business that he is also doing an intrastate business; and it is not thought, though he may have urged that he was doing an intrastate business there, that that fact is inconsistent with or can estop him from urging here, if it be material, that he is...