51 P.2d 327 (Okla. 1935), 26638, Oklahoma Cotton Ginners' Ass'n v. State

Docket Nº:26638.
Citation:51 P.2d 327, 174 Okla. 243, 1935 OK 1004
Opinion Judge:OSBORN, Vice Chief Justice. PER CURIAM.
Party Name:OKLAHOMA COTTON GINNERS' ASS'N et al. v. STATE et al.
Attorney:Rainey, Flynn, Green & Anderson, of Oklahoma City, and C. E. Dudley, of Antlers, for plaintiffs in error. J. B. A. Robertson, Arthur Holloway, and Holmes Baldridge, all of Oklahoma City, for defendants in error.
Case Date:October 17, 1935
Court:Supreme Court of Oklahoma
 
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Page 327

51 P.2d 327 (Okla. 1935)

174 Okla. 243, 1935 OK 1004

OKLAHOMA COTTON GINNERS' ASS'N et al.

v.

STATE et al.

No. 26638.

Supreme Court of Oklahoma

October 17, 1935

Rehearing Denied Nov. 19, 1935.

Syllabus by the Court.

1. The jurisdiction of the Corporation Commission over certain gins, as provided by chapter 176, Sess. Laws 1915, p. 354, as amended (sections 3676-3683, O. S. 1931), was extended under authority of section 19, article 9, of the Constitution.

2. Section 5 of chapter 176, Sess. Laws 1915 (section 3681, O. S. 1931) provides for review of orders of the Corporation Commission fixing rates and charges of operators of gins by appeal to the Supreme Court, and on such appeal this court will judicially, but not legislatively, review the action of the commission.

3. That portion of section 3681, O. S. 1931, purporting to invest this court with any legislative authority, is unconstitutional as in conflict with section 1, article 4, of the Constitution.

4. The procedure for hearing and determination of a proceeding before the Corporation Commission to fix rates and charges for ginning as authorized by sections 18 to 34, inclusive, of article 9, of the Constitution, and sections 3676-3683, O. S. 1931, is not violative of the due process or equal protection clauses of the Federal Constitution (Amendment 14).

5. The Corporation Commission has authority to fix the rates and charges for ginners and apply the same to all gins under its jurisdiction, limited only by the requirement that said rate, so and as applied, shall be reasonable both to the gin operator and to the public. Upon claim that said rate is not reasonable or that same contravenes any constitutional or statutory right of the gin operator, the commission shall hear evidence and make such order as necessary to protect the rights of all parties, having due regard for the principles of reasonableness and lack of discrimination.

6. Under the provisions of section 22, article 9, of the Constitution, a rate for ginning cotton fixed by the Corporation Commission is deemed prima facie reasonable and just, and an order fixing such rate is not subject to judicial interference, unless (1) beyond the power which it could constitutionally exercise; or (2) beyond its statutory power; or (3) based upon a mistake of law; or (4) the rate is so low as to be confiscatory and in violation of the constitutional prohibition against taking property without due process of law; or (5) if the commission acted so arbitrarily or unjustly as to fix rates contrary to the evidence or without evidence to support it; or (6) if the authority therein involved has been exercised in such an unreasonable manner as to cause it to be within the elementary rule that the substance and not the shadow determines the validity of the exercise of power.

Appeal from Corporation Commission.

Proceeding by the Oklahoma Cotton Ginners' Association against the State and others. On appeal from an order of the Corporation Commission fixing rates to be charged cotton ginners.

Order sustained.

GIBSON and PHELPS, JJ., dissenting; WELCH, BUSBY, and BAYLESS, JJ., dissenting in part.

Rainey, Flynn, Green & Anderson, of Oklahoma City, and C. E. Dudley, of Antlers, for plaintiffs in error.

J. B. A. Robertson, Arthur Holloway, and Holmes Baldridge, all of Oklahoma City, for defendants in error.

OSBORN, Vice Chief Justice.

This is an appeal from an order of the Corporation Commission fixing the rate for ginning cotton within the state for the year 1935-36. The appellants are the Oklahoma Cotton Ginners' Association and numerous owners and operators of cotton gins. The rate fixed by the Corporation Commission for said year is 25 cents per 100 pounds for picked cotton, 27 12 cents per 100 pounds for snapped or bollie cotton, and $1 per pattern for bagging and ties.

In determining the rate for ginning cotton, which is fixed annually by the commission prior to the beginning of the ginning season, the commission relies upon certain data furnished annually by the owners and operators of cotton gins showing the book value of each gin, the number of bales ginned, gross operating revenue, net operating expenses, and the net operating revenue. Upon the data so furnished by the owner and operator of each gin, the percentage of profit or loss may be computed by the commission. This data is computed by the commission and is used as one of the important factors in fixing the annual rate.

Pursuant to notice given on July 30, 1935, a hearing was held by the commission, at which time there appeared various gin owners and operators and other persons who appeared in behalf of the farmers. An opportunity was given for the presentation of evidence by those present, and a number of witnesses testified as to general crop conditions and economic conditions existing over the state. M. B. Louthan, auditor and accountant for the commission, testified from an exhibit which had been prepared for the purpose of computing said rate, showing the book value, bales ginned, cost per bale, profit on bagging and ties, gross operating revenue, net operating expenses, net operating revenue, and percentage of loss or profit on the investment of each and every gin operating within the state of Oklahoma for six prior seasons.

Page 329

At the conclusion of the hearing, the commission entered its findings of fact, and, among other things, it was found that the year 1934-35 was an abnormal year; that the number of bales ginned during said season, to wit, 287,363, represented the lowest number of bales ginned since the commission was vested wtih jurisdiction over cotton gins operated as public utilities; that, under the rate prevailing for said season, which was 30 cents per 100 pounds for seed (picked) cotton, and 35 cents per 100 pounds for snapped or bollie cotton, the gins on the west side of the state sustained a loss of 1.8 per cent. on the investment; that the gins on the east side of the state earned a profit of 2.5 per cent. on the investment; that for the entire state there was a loss of .1 per cent. and, by reason of the abnormality of conditions, the year of 1934-35 should be excluded in considering what would be a fair rate to be fixed for the year 1935-36. In addition thereto, the commission found:

"That an attempt to base ginning rates for the current ginning season upon the earnings of the ginning season 1934-35 would obviously be erroneous, because of the tremendous crop failure of the 1934-35 season; that a fair method of determining the ginning rate for the current season requires the rate to be based upon average conditions during a 5-year period which does not include the ginning season 1934-35; that the average experience during the 5-year period 1929-34 represents a fair basis upon which to base rates for the current ginning season; that the average number of gins operating within the State during the 5 seasons 1929-34 was 816; that the average annual value of the 816 gins operating during the 5-year period 1929-34, was $15,588,936.22; that the average annual number of bales ginned during the 5-year period 1929-1934 was 982,082 bales; that the average cost per bale of ginning, during the period 1929-1934, was $3.83; that the average annual gross operating revenues, during the 5-year period 1929-1934, including the profit on bagging and ties, amounted to $5,337,121.84; that the average annual net operating expenses, adjusted, for the 5 seasons 1929-1934, amounted to $3,768,773.24; that the average annual net operating revenues, for the 5 seasons 1929-1934, amounted to $1,568,348.60; that the average annual net earnings on the gin investment, for the 5 seasons 1929-1934, amounted to 10.6 percent; that the average annual rate for the 5 seasons 1929-1934 was 26¢ per 100 pounds for picked cotton, and 32.3¢ per 100 pounds for snapped or bollie cotton; that the operating expenses have, on an average decreased approximately $1.20 per bale from the average cost per bale prevailing during the season 1929-1930 and the season 1930-1931; that the application of a rate of 25¢ per 100 pounds for picked cotton and 30¢ per 100 pounds for snapped or bollie cotton, together with a reduction of $1.20 per bale from the cost per bale of ginning obtaining during the season 1929-1930, applied to the 5-year average of 1929-1934, would result in a net earning on the average gin investment of 11.5 per cent; that the Government forecast, as of August 8th, 1935, for cotton production within the State of Oklahoma for the current season 1935-1936, was 837,000 bales; that this estimate of 837,000 bales may be slightly decreased, due to some drought condition obtaining in Southwestern Oklahoma, and insect infestation in Eastern Oklahoma; that a rate of 25¢ per 100 pounds for picked cotton and 27 1/2 cents per 100 pounds for snapped or bollie cotton is a fair, just and reasonable rate to be charged by ginners for ginning of cotton during the current season 1935-36; that a charge of $1.00 per pattern for bagging and ties is a fair, just and reasonable charge for the same for the ginning season 1935-1936. * * *"

It is urged by the Corporation Commission that a joint appeal from the order of the commission cannot be prosecuted by the individual ginners or by the voluntary organization known as the Oklahoma Cotton Ginners' Association. In view of our determination hereof and of the uncertainty heretofore existing as to the nature of the appeal in such cases and of the failure to notice the question in the case of Oklahoma Cotton Ginners' Ass'n v. Walker et al., 168 Okl. 459, 33 P.2d 766, we shall not determine that question herein, but will go to the merits of the controversy as presented by the record.

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