New Hampshire Gas & Electric Co. v. Morse

• Decision Date: 12 July 1930
• Parties: NEW HAMPSHIRE GAS & ELECTRIC CO. et al. v. MORSE et al.
• Court: U.S. District Court — District of New Hampshire

42 F.2d 490 (1930)

NEW HAMPSHIRE GAS & ELECTRIC CO. et al. v. MORSE et al.

District Court, D. New Hampshire.

July 12, 1930.

Robert W. Upton, of Concord, N. H., and Robert G. Dodge, of Boston, Mass., for complainants.

Ralph W. Davis, Atty. Gen., Winthrop Wadleigh, Asst. Atty. Gen., and Louis E. Wyman, of Manchester, N. H., for defendants.

Before BINGHAM, Circuit Judge, and MORTON and MORRIS, District Judges.

MORRIS, District Judge.

This is an action pendente lite brought under section 266 of the Judicial Code (U. S. Code, title 28, § 380 28 USCA § 380), to restrain the Public Service Commission of New Hampshire from carrying out an order of the commission made May 15, 1930, for examination with reference to matters and things set forth in its order the material parts of which are hereinafter quoted at length.

Of the plaintiffs, the New Hampshire Gas & Electric Company and the Derry Electric Company are New Hampshire public utility corporations with principal places of business at Portsmouth and Derry, N. H., respectively, furnishing gas, light, and power within their home towns and surrounding communities.

The plaintiff Associated Gas & Electric Company is a corporation organized under the laws of the state of New York and is a holding company of the stock of other corporations furnishing light and power and performing various public services throughout the United States and its possessions. It holds the stock of no company engaged in business in New Hampshire.

The plaintiffs Greene, Cheney & Partridge, are residents, respectively, of Cambridge and Hyannis, Mass., and Orange, N. J. They are trustees under an indenture of trust establishing the New England Gas & Electric Association, which is a common-law trust organized in Massachusetts, holding as investments the stock of Public Service Companies operating within the limits of New England and furnishing light, power, and gas to communities within that area. It holds stock in the New Hampshire Gas & Electric Company and the Derry Electric Company.

The defendants Mayland H. Morse, Fred H. Brown, and H. Styles Bridges are all residents of the state of New Hampshire, and constitute the Public Service Commission for that state. Defendant Morse is chairman of the commission.

The material parts of the order of the commission against which injunctive relief is sought command the plaintiffs to appear before the commission on June 3, 1930, at 10 o'clock in the forenoon at its offices in Concord, N. H., for the following stated purposes:

"To investigate or make inquiry in a manner to be determined by it as to the outstanding issues of stocks, bonds, notes and other evidence of indebtedness of the New Hampshire Gas and Electric Company, the Derry Electric Company, and any corporation, company, association, joint stock association, partnership and person, their lessees, trustees, or receivers appointed by any court in any way affiliated or connected with the aforesaid companies or the Associated Gas and Electric Company or any of its subsidiaries or affiliated companies, owning, operating or managing any plant or equipment or any part of the same for the conveyance, manufacture, or furnishing of light, heat or power for the public, or in the generation, transmission or sale of electricity ultimately sold to the public.

"At said hearing duly authorized representatives of the foregoing companies are hereby ordered to be present and among other things to submit to the Commission full, true and complete statements of all issues of stocks, bonds, notes and other evidence of indebtedness, the authority therefor, both corporate and governmental, the purpose thereof and the bases therefor.

"Said representatives shall further file at said hearing, true and complete copies of all contracts, agreements and correspondence in any way relating to the finances of the aforesaid companies.

"Said representatives shall submit at said hearing a complete statement and detailed explanation of the financial structure of the aforesaid companies and their general method of financing, together with a complete list of stockholders, shareholders and owners, both nominal and beneficial.

"Said representatives shall submit at said hearing a detailed list of all officers, directors and trustees of said companies together with their salaries and the bases therefor."

Service of the order was made by sending copies by mail to the principal places of business of the corporations named as plaintiffs in this action.

This bill was filed May 23, 1930. An order of notice was issued to the members of the commission to appear before a court of three judges organized as directed under the provisions of section 266 of the Judicial Code.

The plaintiffs contend that, if the order of May 15, 1930, is enforced, they will be deprived of their property without due process of law in violation of the Fourteenth Amendment of the Constitution of the United States because the order exceeds the scope of the jurisdiction of any commission which New Hampshire could create.

It has not been found necessary to issue any restraining order. The commission consented to a continuance of its hearing until the motion for a temporary injunction was determined.

The evidence before the court consisted of affidavits filed by the plaintiff and oral testimony offered by the defendant.

The order of the commission which is the subject of contention is based on chapter 238 of the Public Laws of New Hampshire and amendments thereto.

The defendants challenge the jurisdiction of the statutory court on the grounds that the petition for an injunction is premature, and that the plaintiffs have an adequate remedy at law.

In their written argument filed in behalf of the commission, counsel have not argued the question of jurisdiction, but say they have no intention of waiving the point previously made in oral argument that, inasmuch as the New Hampshire Supreme Court has full power to review the action of the commission, this court is without jurisdiction until the Supreme Court of the state has decided adversely the plaintiffs' contention.

We cannot indorse the position taken by counsel for the commission. In the case of Smyth v. Ames, 169 U. S. 446, 18 S. Ct. 418, 422, 42 L. Ed. 819, it is held that: "The adequacy or inadequacy of a remedy at law for the protection of the rights of one entitled upon any ground to invoke the powers of a federal court is not to be conclusively determined by the statutes of the particular state in which suit may be brought. One who is entitled to sue in the federal circuit court may invoke its jurisdiction in equity whenever the established principles and rules of equity permit such a suit in that court; and he cannot be deprived of that right by reason of his being allowed to sue at law in a state court on the same cause of action."

And in the case of Western Union Telegraph Co. v. Andrews, 216 U. S. 165, 30 S. Ct. 286, 54 L. Ed. 430, it is held that: "Individuals, who, as officers of the State, are clothed with some duty in regard to the enforcement of the laws of the State, and who threaten and are about to commence proceedings, either of a civil or criminal nature, to enforce against parties affected an unconstitutional act, violating the Federal Constitution, may be enjoined by a Federal court of equity from such action; and such an action is not prohibited by the Eleventh Amendment of the Constitution of the United States."

In the case of Re Debs, 158 U. S. 565, 593, 15 S. Ct. 900, 909, 39 L. Ed. 1092, Mr. Justice Brewer says: "It is objected that it is outside of the jurisdiction of a court of equity to enjoin the commission of crimes. This, as a general proposition, is unquestioned. A chancellor has no criminal jurisdiction. Something more than the threatened commission of an offense against the laws of the land is necessary to call into exercise the injunctive powers of the court. There must be some interferences, actual or threatened, with property or rights of a pecuniary nature; but when such interferences appear the jurisdiction of a court of equity arises, and is not destroyed by the fact that they are accompanied by or are themselves violations of the criminal law."

In the case of Chicago, B. & Q. R. Co. v. Oglesby (D. C.) 198 F. 153, 156, Judge Van Valkenburgh, referring to section 266 of the Judicial Code, says: "It will thus be seen that a remedy against unjust, unreasonable, or oppressive orders is expressly granted, and, whenever a citizen of a state can go into the courts of a state to defend his property against the illegal acts of its officers, a citizen of another state may invoke the jurisdiction of the federal courts to maintain a like defense. Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362-391, 14 S. Ct. 1047, 38 L. Ed. 1014. When the jurisdiction of a federal court of equity attaches, it is governed by its own rules of procedure, and not by those prevailing in the state jurisdiction."

The jurisdiction of the federal court to entertain this bill is, as to the two nonresident corporations, too clear to require the further citation of authorities.

It is contended by the defendants that the action is premature because none of the plaintiffs, at the time the bill was filed, had suffered any injury either in person or property.

Public Laws of New Hampshire, chapter 238, §§ 38 to 42, inclusive, provide penalties for disobedience of any order made by the Public Service Commission as follows:

Section 39 provides that: "Any railroad corporation or public utility which shall violate any provisions of this title, or fails, omits or neglects to obey, observe or comply with any order, direction or requirement of the commission, shall be fined not more than five thousand dollars."

Section 40 provides that: "Every officer and agent of any such railroad corporation or public utility who shall wilfully violate, or who procures, aids or abets any violation of this title,...