United Fuel Gas Co v. Railroad Commission of Kentucky

Decision Date02 January 1929
Docket NumberNo. 1,1
PartiesUNITED FUEL GAS CO. et al. v. RAILROAD COMMISSION OF KENTUCKY et al. Re
CourtU.S. Supreme Court

Messrs. John W. Davis, of New York City, Harold A. Ritz, of Charleston, W. Va., and Simeon S. Willis, of Ashland, Ky., for appellants.

[Argument of Counsel from pages 301-304 intentionally omitted] Mr. John T. Diederich, of Ashland, Ky., for appellees.

Mr. Justice STONE delivered the opinion of the Court.

This is an appeal from a final decree of the District Court for Eastern Kentucky denying an injunction restraining the appellee the Railroad Commission of Kentucky from establishing an alleged confiscatory rate for the sale of natural gas in the cities of Ashland, Catlettsburg, and Louisa, Ky., or in the alternative from preventing appellants from withdrawing their service in the sale and distribution of natural gas to consumers in those cities. 13 F.(2d) 510. The case comes here on direct appeal under section 238 of the Judicial Code (28 USCA § 345); the decree of the district court having been entered before the effective date of the Jurisdictional Act of February 13, 1925.

The case was argued here with No. 4, United Fuel Gas Co. v. Pub. Serv. Comm. of W. Va., 278 U. S. 322, 49 S. Ct. 157, 73 L. Ed. —, decided this date, which involves some questions considered in the opinion in this case.

Appellant United Fuel Gas Company, a West Virginia corporation, also appellant in No. 4, is engaged in the business of producing natural gas from gas fields located principally in West Virginia, which it sells to consumers in West Virginia, Kentucky, and Ohio. A part of its business is the sale of gas wholesale to distributors in West Virginia, and has not been subjected to regulation by any public body. Its local business in Kentucky is subjected to regulation by appellee. It formerly held franchises for the sale and distribution of gas in the Kentucky cities named all of which had expired by July, 1918. Neverthe less, it continued its service in those cities until June, 1923, when it organized appellant Warfield Natural Gas Company, a Kentucky corporation, whose stock it owns and to which it conveyed its property in Kentucky, and which has since carried on its business of distributing gas in the cities named. The United Company then purported to withdraw from all its business in Kentucky by canceling appointments of agents to receive service of process within the state and by notifying the Secretary of State of its action.

Before the organization of the Warfield Company, proceedings were had before the commission which resulted in its order directing a reduction of rates by the United Company to 80 per cent. of the former rate of 40 cents per 1,000 cubic feet, less 5 cents for prompt payment. Promptly on its organization, the Warfield Company filed with the commission a new rate schedule for the cities named of 45 cents per 1,000 cubic feet, with a reduction of 5 cents for punctual payment, and petitioned the commission to establish this rate as fair and reasonable or, in the alternative, to permit it to withdraw its service from those cities. After an extensive hearing, the commission denied the application, and construed its earlier order as requiring a rate of 28 cents (80 per cent. of 35 cents).

The present suit was then brought in the District Court. That court construed the order of the commission as fixing a 32-cent rate, which it upheld and enjoined the commission from imposing any lower rate. From the latter part of the decree no appeal was taken.

The present appeal challenges the constitutionality of the order of the commission, as construed by the court, under the Fourteenth Amendment of the Federal Constitution, both because the rate is confiscatory and because the order which, under the Kentucky Statutes, is not subject to judicial review, was not supported by findings of the commission. The validity of the order is also assailed on the further grounds that the part of it which required appellants to continue to render service violates the Ken- tucky Constitution, and that the commission itself was never constitutionally created, and hence was without jurisdiction, because the legislative act establishing the commission and giving it its authority is in violation of section 51 of the Kentucky Constitution, which provides that no legislative act shall relate to more than one subject, which shall be expressed in its title.

The District Court and this court, having jurisdiction of the cause since questions are raised under the Constitution of the United States, may pass on all questions of state law involved, Risty v. Chicago, Rock Island & Pacific Ry. Co., 270 U. S. 378, 387, 46 S. Ct. 236 (70 L. Ed. 641), and must do so so far as they are necessary to a decision.

Section 163 of the Kentucky Constitution provides that gas companies may not procure franchises permitting them to lay pipes in and under public streets without the consent of the appropriate municipal governing bodies, and section 164 limits all franchises to periods not exceeding 20 years. Section 23 of the Statutes of Kentucky, c. 61 (Acts of 1920, p. 250), subjects any public service company which has continued its service after the expiration of its franchise to the jurisdiction and authority of the Railroad Commission, and forbids it to withdraw such service without permission of the commission so long as it remains in business in any part of the state. It is said that the action of the commission under this statute in effect operates as a renewal of the franchise of appellants in the cities named in a manner not in conformity with the provisions of the State Constitution.

But this objection, and that as well to the constitutionality, on state grounds, of the statute creating the commission and defining its powers, are not available to appellants in the present suit. It is the rule of this court, consistently applied, that one who has invoked action by state courts or authorities under state statutes may not later, when dissatisfied with the result, assail their action on the theory that the statutes under which the action was taken offend against the Constitution of the United States. Wall v. Parrot Silver & Copper Co., 244 U. S. 407, 37 S. Ct. 609, 61 L. Ed. 1229; Electric Co. v. Dow, 166 U. S. 489, 17 S. Ct. 645, 41 L. Ed. 1088; Eustis v. Bolles, 150 U. S. 361, 14 S. Ct. 131, 37 L. Ed. 1111; Hurley v. Comm. of Fisheries, 257 U. S. 223, 42 S. Ct. 83, 66 L. Ed. 206; St. Louis Malleable Casting Co. v. George C. Prendergast Co., 260 U. S. 469, 43 S. Ct. 178, 67 L. Ed. 351. Upon like principle we think that appellants who have procured action by a state commission under a state statute may not assail that action in a federal court of equity on the ground that that statute, or the one creating the commission, is void under the State Constitution. Cf. Shepard v. Barron, 194 U. S. 553, 24 S. Ct. 737, 48 L. Ed. 1115. The sound discretion which controls the exercise of the extraordinary powers of a federal court of equity should not permit them to be exerted to relieve suitors on such a ground from the very action of state authorities which they have invoked.

Assuming as we do for present purposes the authority of the commission under state law to refuse its permission to appellants to withdraw, we perceive no objection under the Federal Constitution, or otherwise, to withholding it. Appellants do not seriously deny that the Warfield Company is but an agency organized by the United Company for the purpose of carrying on its public service business in Kentucky or that through that agency the latter is doing business in the cities named and elsewhere in the state. In these circumstances its continuance in those cities is neither forbidden nor illegal. It remained subject to state regulation, and control of it is, by state statute, vested in the commission with state-wide authority. If a state may require a public service company subject to its control to make reasonable extensions of its service in order to satisfy a new or increased demand, present or anticipated, New York & Queens Gas Co. v. McCall, 245 U. S. 345, 38 S. Ct. 122, 62 L. Ed. 337; Woodhaven Gas Light Co. v. Pub. Serv. Comm., 269 U. S. 244, 46 S. Ct. 83, 70 L. Ed. 255; Missouri Pac. Ry Co. v. Kansas, 216 U. S. 262, 30 S. Ct. 330, 54 L. Ed. 472; Wisconsin, etc., R. Co. v. Jacobson, 179 U. S. 287, 21 S. Ct. 115, 45 L. Ed. 194; Atlantic Coast Line v. No. Car. Corp'n Comm., 206 U. S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 11 Ann. Cas. 398; Chicago & Northwestern Ry. Co. v. Ochs, 249 U. S. 416, 39 S. Ct. 343, 63 L. Ed. 679, obviously the latter may be compelled to continue to use present facilities to supply an existing need so long as it continues to do business in the state.

The primary duty of a public utility is to serve on reasonable terms all those who desire the service it renders. This duty does not permit it to pick and choose and to serve only those portions of the territory which it finds most profitable, leaving the remainder to get along without the service which it alone is in a position to give. An important purpose of state supervision is to prevent such discriminations, see New York & Queens Gas Co. v. McCall, supra, at page 351 (38 S. Ct. 122), and, if a public service company may not refuse to serve a territory where the return is reasonable, or even in some circumstances where the return is inadequate but that on its total related business is sufficient, Atlantic Coast Line v. No. Car. Corp'n Comm., supra, at page 25 (27 S. Ct. 585); Missouri Pac. Ry. Co. v. Kansas, supra, at page 277 (30 S. Ct. 330), it goes without saying that junction with the demand which it has created, as a weapon to control rates by threatening to discontinue that part of its service if it does not receive the rate demanded. The powers of the state, so far as the Federal Constitution is concerned, were not exceeded by the...

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