265 U.S. 196 (1924), Pacific Telephone & Telegraph Company v. Kuykendall
| Citation | 265 U.S. 196, 44 S.Ct. 553, 68 L.Ed. 975 |
| Party Name | Pacific Telephone & Telegraph Company v. Kuykendall |
| Case Date | May 26, 1924 |
| Court | U.S. Supreme Court |
Page 196
APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES
FOR THE WESTERN DISTRICT OF WASHINGTON
Syllabus
1. When the jurisdiction of a state court to review orders of a Commission fixing rates is confined to determining on the record certified by the Commission whether the order is lawful and reasonable and whether evidence was improperly excluded, without power to pass on the weight or sufficiency of evidence or to enter any new order in lieu of the one appealed from, the remedy is purely judicial, and need not be invoked by a party complaining of the rates fixed as confiscatory, before seeking relief in a federal court. Remington's Comp. Washington Stat. 1922, § 10428, considered. P. 200.
2. A state statute empowering a Commission, after hearing, to refuse an increase of rates proposed by a public utility cannot, by forbidding supersedeas until a final judicial decree has been rendered in the state courts, prevent recourse to a federal court for temporary relief by injunction. P. 201.
3. Under the law of Washington, Rem.Comp.Stat. 1922, § 10441, providing for revision of administrative valuations of the property of public utilities, the function of the state courts is not merely judicial, but also legislative, since they can pass upon the weight of evidence, and can set aside a valuation and make a new one. Keller v. Potomac Co., 261 U.S. 428. Id.
4. The fact that a public utility had resorted to the state courts, acting legislatively, to change a valuation of its property, would not bar it from seeking relief in the federal court against rates based on the valuation as approved by the state courts. P. 203
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5. Comity usually prevents seeking such relief in a federal court before the legislative remedy in the state courts has been exhausted. Prentis v. Atlantic Coast Line Co., 211 U.S. 210. P. 203.
6. But when a public utility, by reason of an order reinstating rates which it sought to increase, is suffering daily from confiscation, and under the state law (Rem.Comp.Stat. 1922, § 10429) no stay is allowable pending revision by the state courts, comity does not prevent relief by a federal court. P. 204.
7. A litigant whose constitutional rights are being invaded and to whom a statute denies a supersedeas in the state tribunals may properly base his application for equitable relief on the effect of the statute and the presumption of its validity, and is not required to establish that the state statute is not invalid under the state constitution. Dawson v. Kentucky Distilleries Co., 255 U.S. 288. P. 205.
8. Where appeal from an order refusing an interlocutory injunction is followed by an appeal from a final decree dismissing the bill on the same ground, the first appeal should be dismissed and relief be granted under the second. Id.
Reversed.
Appeals from decrees of the district court refusing an interlocutory injunction and dismissing the bill, in a suit to enjoin interference with increases of telephone rates.
TAFT, J., lead opinion
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
These are two appeals from the district court in the same case involving the question of the confiscatory character
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of rates for telephone service within the State of Washington and in the Cities of Seattle and Tacoma, to which rates the appellant company is limited by a refusal of the Department of Public Works to permit an increase thereof. The Pacific Telephone & Telegraph Company is a corporation of California authorized to do business in Washington and owning a plant covering the state. It owns all the stock of the Home Telephone Company, which owns and operates the Spokane Exchange. A similar question as to confiscatory rates has arisen in respect to that company and that exchange, but a separate bill was filed by that company and is considered on appeal in a case reported next after this.
This bill by the Pacific Company seeks an injunction against the Department of Public Works of the state to prevent it from interfering with the maintenance and collection of the increased rates the company proposes in all parts of Washington except Spokane. A court of three judges was organized to hear the application for a temporary order. The suit depended for jurisdiction both on the diverse citizenship of the parties and upon the averment that the order of the Department of Public Works, if enforced, would deprive the company of its property without due process of law, in violation of the Fourteenth Amendment. The court set aside the temporary restraining order issued by the district judge on the filing of the bill and denied the application for temporary injunction. Appeal was taken direct to this Court under Judicial Code § 266, as amended by Act March 4, 1913, 37 Stat. 1013. After the denial of the temporary injunction, the district judge heard the case on a motion to dismiss the bill, and granted the motion, and from this final decree a second appeal was taken.
The bill of complaint shows that, on August 8, 1919, the Public Service Commission of the state, the predecessor of the Department of Public Works, made an order
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prescribing maximum rates and charges to be charged by the Pacific Company on and after that date within the State of Washington which are made an exhibit to the bill; that, on September 20, 1922, the company filed a schedule of rates with the Department of Public Works increasing rates to be charged for exchange telephone service in all the exchanges owned by the company in Washington; that the department on September 24, 1922, suspended the rates for 30 days, and that, after numerous hearings as to their reasonableness, the department by a majority of two members on March 31, 1923, denied the increase. The bill further averred that the fair and reasonable value of the property of the company in Washington, not including the Spokane plant, was $35,616,896, which includes $20,852,607 for the Seattle plant, and $3,457,290, for that of Tacoma, and that this estimate includes nothing for franchises and nothing [44 S.Ct. 555] for going concern; that the fair annual return which the company was entitled to earn was 8 percent on this value, whereas the actual return was as follows:
Fair
Cost Value
Year 1919, State of Washington . . . . . . 4.97% 3.67%
Year 1919, City of Seattle . . . . . . . . 3.97% 2.66%
Year 1919, City of Tacoma. . . . . . . . . .98% .81%
Year 1920, State of Washington . . . . . . 4.42% 3.33%
Year 1920, City of Seattle . . . . . . . . 1.85% 1.29%
Year 1920, City of Tacoma. . . . . . . . . .89% .74%
Year 1921, State of Washington . . . . . . 3.30% 2.58%
Year 1921, City of Seattle . . . . . . . . .69% .52%
Year 1921, City of Tacoma. . . . . . . . . .58% .48%
Year 1922, State of Washington . . . . . . 3.17% 2.58%
Year 1922, City of Seattle . . . . . . . . .19% .15%
Year 1922, City of Tacoma .89% .75%
that such returns were confiscatory and a violation of the rights of the company under the Fourteenth Amendment; that therefore the order of March 31, 1923, was void; that the company had no adequate remedy at law; that, if an attempt were made to enforce the rates it proposed to
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make, the Department of Public Works and others in state authority, defendants would, unless restrained by the court, institute proceedings to compel compliance with the confiscatory schedule, and that the company and its officers and employees would be subjected to a multiplicity of suits...
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