Consolidated Gas Co. of New York v. Newton

• Decision Date: 24 February 1919
• Parties: CONSOLIDATED GAS CO. OF NEW YORK v. NEWTON, Atty. Gen., et al.
• Court: U.S. District Court — Southern District of New York

256 F. 238

CONSOLIDATED GAS CO. OF NEW YORK v. NEWTON, Atty. Gen., et al.

United States District Court, S.D. New York.

February 24, 1919

Shearman & Sterling, of New York City (E. Henry Lacombe, John A Garver, and William L. Ransom, all of New York City, of counsel), for plaintiff.

Godfrey Goldmark, of New York City, for defendant Public Service Commission, First District.

Charles D. Newton, Atty. Gen., Robert S. Conklin, Deputy Atty. Gen Edward Swann, Dist. Atty., and Felix C. Benvenga, Asst. Dist Atty., both of New York City, for other defendants.

William P. Burr, Corp. Counsel, of New York City (Vincent Victory Asst. Corp. Counsel, of New York City, of counsel), for city of New York.

MAYER District Judge.

This is a motion by the corporation counsel, on behalf of the city of New York, for an order, under equity rule 37 (198 F. xxviii, 115 C.C.A. xxviii), to allow the city of New York to intervene as a party defendant in a suit brought by plaintiff to have declared unconstitutional and void the so-called Eighty-Cent Gas Law. The defendants in the present suit are the Attorney General of the state of New York, the district attorney of the county of New York, and the officials constituting the Public Service Commission of the State of New York, First District.

An outline of the history of the litigation in respect of the statute here concerned, and a statement of the status, as matter of law, of the various defendants and the city of New York, are desirable in order clearly to understand the subject-matter of this motion, for the question before the court is solely a question of law, and not one of public or administrative policy, and the only power which the court has is to determine whether or not, under equity rule 37, the city has the right, as matter of law, to intervene, and the court has the right to make its order accordingly.

By chapter 736 of the Laws of 1905, all corporations or persons engaged in the business of furnishing or selling illuminating gas in the city of New York were forbidden to charge said city a higher price therefor than 75 cents per 1,000 cubic feet. This statute dealt solely with the price of gas to the city of New York in its capacity as a municipal corporation. Under section 3 of this statute, it was provided that:

'Any corporation * * * violating any provision of this act shall forfeit the sum of one thousand dollars for each offense to be sued for and recovered in the name of and by the city of New York for its benefit.'

On April 3, 1906, the New York Legislature enacted chapter 125 of the Laws of 1906, which fixed the price of gas for all persons or corporations manufacturing, furnishing, or selling the same in the borough of Manhattan, and certain other parts of the city of New York, at 80 cents per 1,000 cubic feet. This latter statute has become familiarly known as the Eighty-Cent Gas Law. Under section 3 of this statute it was provided that:

'Any corporation * * * violating any provision of this act shall forfeit the sum of one thousand dollars for each offense to the people of the state.'

And by section 4 it was provided that:

'This act shall not apply to gas furnished or sold to the city of New York.'

Under section 1962 of the New York Code of Civil Procedure it is provided that, where a penalty is incurred to the people of the state pursuant to a provision of law:

'The Attorney General, or the district attorney of the county in which the action is triable, must bring an action to recover the * * * penalty, in a court having jurisdiction thereof.'

Chapter 737 of the Laws of 1905 established a state 'commission of gas and electricity,' appointable by the Governor, by and with the advice and consent of the state senate. The statute conferred upon this commission, among its other powers and duties, certain regulatory powers in respect of gas manufacture and sale, and certain powers and duties in relation to corporations or persons manufacturing or selling gas.

Chapter 125 of Laws of 1906 was to take effect on May 1, 1906. Prior to that date, Consolidated Gas Company brought suit in the then Circuit Court of the United States for the Southern District of New York, asserting that the rate under both statutes, supra, was confiscatory, and therefore unconstitutional, as in violation of the Fourteenth Amendment, and also asserting that the difference in rate between that established for the municipality and that established for individual consumers created an unreasonable classification, which amounted to a denial of the equal protection clause of the Fourteenth Amendment.

Plaintiff in that suit (which is the same plaintiff as in this suit) joined as parties defendants the public officers and official bodies upon whom was cast the duty of enforcing, in one respect or another, the carrying out of both statutes, the constitutionality of which plaintiff was then attacking. The result was that, at the beginning of the suit, the defendants were the Attorney General of the state of New York, the district attorney, the commission of gas and electricity, and the city of New York.

While the personnel of the public officers changed during the progress of the litigation, the only change in respect of the official character of any defendant was that occasioned by the abolition of the commission of gas and electricity and the creation of the Public Service Commissions. In due course, after the enactment of the Public Service Commissions Law (Consol. Laws, c. 48), the officials constituting the Public Service Commission of the State of New York, First District, were substituted as defendants in place of those who had constituted the commission of gas and electricity.

The statute was vigorously defended by the Attorney General, the Public Service Commission, and the city of New York, through its corporation counsel. The district attorney, although a necessary party, was, for all practical purposes, a formal party, and with entire propriety, in the circumstances, left the activities of the case to the other public officers and bodies.

The history of the litigation (the details of which need not be recited at length) will be found in outline in Consolidated Gas Co. v. Mayer et al. (C.C.) 146 F. 150, Consolidated Gas Co. v. City of New York et al. (C.C.) 157 F. 849, and Willcox v. Consolidated Gas Co., 212 U.S. 19, 29 Sup.Ct. 192, 53 L.Ed. 382. The Supreme Court of the United States in Willcox v. Consolidated Gas Co., supra, held as follows:

'Upon a careful consideration of the case before us, we are of opinion that the complainant has failed to sustain the burden cast upon it of showing beyond any just or fair doubt that the acts of the Legislature of the state of New York are in fact confiscatory.

'It may possibly be, however, that a practical experience of the effect of the acts by actual operation under them might prevent the complainant from obtaining a fair return, as already described, and in that event complainant ought to have the opportunity of again presenting its case to the court. To that end we reverse the decree, with directions to dismiss the bill without prejudice; and it is so ordered.'

From the foregoing it is apparent that the opportunity was left open to plaintiff to bring another suit in the future, when and if it thought it could show a state of facts which would render unconstitutional the statutes in question.

In the present suit chapter 736 of the Laws of 1905 is not attacked. No relief whatever is sought against the city of New York, and this suit is brought for the sole purpose of attacking the constitutionality of chapter 125 of the Laws of 1906, in so far as that statute limits the rate for gas sold to private consumers in the city of New York to 80 cents per 1,000 cubic feet. It is further stated under oath, on behalf of plaintiff, that no attack will be made by plaintiff in this suit upon chapter 736 of the Laws of 1905.

At the outset, therefore, it will be seen that the actual situation in the present suit differs from that which obtained in the previous suit in some important particulars: First, as above set forth, the statute fixing the price of gas to the city of New York is not now in controversy; and, secondly, the Public Service Commission, First District, which only became a party after the first suit had been in progress for some time, is the official body of local jurisdiction under existing law which is charged with safeguarding the rights and interests of those affected by the 80-cent rate secured under chapter 125 of the Laws of 1906. The Public Service Commissions Law, being chapter 429 of the Laws of 1907, went into effect on July 1, 1907. The general plan and purpose of that statute was to create a new body of public officials, upon whom was conferred new and important powers in respect of the regulation and supervision of certain classes of public utilities, some of which powers had theretofore been confided to municipal or other local authorities. The Legislature provided for two public service districts, and for a commission in each district; the first district including those counties which constitute the city of New York.

It is unnecessary to set forth in detail the important powers conferred upon these commissions, and it is sufficient in that connection to refer to section 74 of the Public Service Commissions Law to point out the comprehensive and responsible duties of the commissions in regard to gas corporations. That section provides as follows:

'Whenever either commission shall be of opinion that a gas corporation * * * or municipality within its jurisdiction is failing or omitting or about to fail or omit to do anything required of it by law or by order of the commission or is doing

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