Great Northern Utilities Co. v. Public Service Commission

• Decision Date: 29 July 1930
• Docket Number: 6679.
• Citation: 293 P. 294,88 Mont. 180
• Parties: GREAT NORTHERN UTILITIES CO. v. PUBLIC SERVICE COMMISSION et al.
• Court: Montana Supreme Court

293 P. 294

88 Mont. 180

GREAT NORTHERN UTILITIES CO. v. PUBLIC SERVICE COMMISSION et al.

No. 6679.

Supreme Court of Montana

July 29, 1930

As Modified on Denial of Rehearing November 25, 1930.

Appeal from District Court, Lewis and Clark County; A. J. Horsky Judge.

Suit by the Great Northern Utilities Company against the Public Service Commission of Montana, composed of Dan Boyle and others, and another. Decree for plaintiff, and defendants appeal.

Reversed and remanded.

L. A Foot, Atty. Gen., L. V. Ketter, Asst. Atty. Gen., and Francis A. Silver, of Helena, for appellants.

Maddox & Church, of Great Falls, Louis P. Donovan, of Shelby, and Gunn, Rasch, Hall & Gunn and E. G. Toomey, all of Helena, for respondents.

LEIPER District Judge.

The Great Northern Utilities Company, the plaintiff herein, is engaged in the business of furnishing natural gas to the inhabitants of the city of Shelby, Mont. The Public Service Commission of the state of Montana made an order, which is hereinafter referred to, fixing a precise rate or charge to be made by the plaintiff for its product, and requiring the plaintiff to file, on or before a certain date, its schedule of rates in accordance with such order. The plaintiff seeks first, an injunction restraining the Public Service Commission of the state of Montana from enforcing its order; and, second, a decree adjudging such order null and void.

For convenience, the plaintiff herein will be designated as the utility, and the Public Service Commission of Montana as the commission. In so far as material here, the facts may be briefly summarized as follows:

That the utility is a corporation, the defendants Boyle, Dennis, and Young, the commission, and the defendant Foot, the Attorney General of the state of Montana. That the city of Shelby is a municipal corporation. That in 1922 the city of Shelby duly granted to the assignor of the utility a franchise, which was duly accepted, under which franchise the utility acquired the right to manufacture, sell, and distribute to the consumer natural gas within the corporate limits of that city. That in 1923 the utility, in the exercise of such franchise, constructed its plant and began the sale and distribution of natural gas to the inhabitants of Shelby. That in the year 1927 the city council of Shelby granted to the assignor of the Citizens' Gas Company, hereinafter referred to as the company, a franchise similar to that theretofore granted to the utility. That in 1928 the company constructed a system for the distribution of natural gas in Shelby, which is in part a duplication of that of the utility. That the system of distribution of the company is being extended so that eventually it will be an entire duplication of that of the utility. That this plant of the company was constructed and is being operated in competition with that of the utility, without the approval of the commission, except that the commission has approved the schedule of charges filed by the company, and hereinafter set forth. That Shelby is a city of about 2,500 inhabitants. That at all times the utility, through its gas plant or system, has been, is, and will continue to be able to furnish all of the gas required by all of the inhabitants of Shelby. That at the time of the construction of the plant of the company, the utility, with the tentative approval of the commission, was charging for its product the following rates:

First 10,000 cu. ft. per month Next 10,000 ' ' ' ' Next 30,000 ' ' ' ' Next 250,000 ' ' ' ' Over 300,000 ' ' ' '

That the company filed with the commission its schedule of rates for gas, which was approved by the commission, and which charges are as follows:

First 10,000 cubic feet Next 10,000 ' ' Next 30,000 ' ' Next 250,000 ' ' All over 300,000 ' '

That the company began furnishing gas in October, 1928. That at that time the utility had 485 customers. That shortly after October, 1928, 127 of such customers of the utility ceased to purchase gas from the utility and became customers of the company.

Paragraphs XVII and XVIII of the complaint are:

"Paragraph XVII. That this plaintiff, to prevent the loss of all of its customers or patrons, and to protect and preserve its investment in its gas plant or system, on the 8th day of November, 1928, proposed and filed with the Public Service Commission a tariff or schedule of rates 25¢ per thousand cubic feet for all consumption up to three hundred thousand (300,000) cubic feet, and 20¢ per thousand cubic feet for all quantities over three hundred thousand (300,000) cubic feet, and on November 19, 1928, this plaintiff proposed and filed with said Public Service Commission a tariff or schedule of rates, designated by said Commission as 'Schedule 4-A', of 20¢ per thousand cubic feet up to three hundred thousand (300,000) cubic feet and 15 1/2¢ per thousand cubic feet for all over three hundred thousand (300,000) cubic feet.

"Paragraph XVIII. That upon the filing of said Schedule 4/A, The Citizens Gas Company presented to and filed with said Public Service Commission a complaint and protest against said Schedule 4/A upon the grounds that the rates thereby proposed were 'unfair, unjust and unreasonable' to said company. That a hearing was ordered and held by the said Public Service Commission, upon its own motion, at the City of Shelby, on December 20, 1928, for the purpose of determining the reasonableness and justness of the rates proposed by this plaintiff by said schedule, designated as Schedule 4-A. At said hearing the Citizens Gas Company and twelve customers or patrons of said company appeared, claiming and contending that said rates so proposed were not remunerative or proposed in good faith but as competitive rates. This plaintiff presented evidence in support and justification of said rates under the conditions and circumstances, and thereafter, and on January 22, 1929, the said Public Service Commission, Commissioner Young dissenting, made and issued its report and order, a copy of which is hereto attached and made a part hereof as Exhibit 'C."'

Net. --------------------------- per meter 50 cents per M. cu. ft. ' ' 45 cents ' ' ' ' ' ' 40 cents ' ' ' ' ' ' 35 cents ' ' ' ' ' ' 30 cents ' ' ' '

Net. ------------------------------- Per month 35 cents per M. cu. ft. ' ' 30 cents ' ' ' ' ' ' 27 1/2 cents ' ' ' ' ' ' 25 cents ' ' ' ' ' ' 22 1/2 cents ' ' ' '

The allegations contained in paragraphs XVII and XVIII are in part admitted and in part denied; the answer as to these paragraphs being as follows:

"As to paragraph XVII, these answering defendants admit that the plaintiff proposed and filed with the Public Service Commission of Montana the tariffs set forth in said paragraph, but except as herein admitted the defendants deny each and every and all allegations contained in said paragraph. Admit that the Citizens Gas Company filed with said Public Service Commission a complaint and protest as in said paragraph XVIII alleged, but in this connection the defendants allege that said complaint was dismissed by the said Public Service Commission of Montana and no hearing of any kind or character was held or had thereon; admit that the Public Service Commission of Montana, upon its own motion, held a public hearing at Shelby, Montana, on December 20, 1928, to inquire into the reasonableness and justness of the rates proposed by plaintiff in its schedule 4-A, and that at said hearing the Citizens Gas Company and twelve customers thereof appeared before the said Public Service Commission and contended that the said rates proposed by plaintiff were not proposed in good faith; admit that plaintiff presented evidence to the said Public Service Commission; admit that on January 22, 1929, the said Public Service Commission made and issued its report and order, a true and correct copy of which it attached to the said 'second amended complaint' and marked exhibit 'C,' but except as hereinabove specifically admitted the defendants deny each and every and all allegations contained in said paragraph XVIII."

It is alleged that such order of the commission is violative of the provisions of section 20 or article 15 of the Constitution of the state of Montana, and also of the Fourteenth Amendment to the Constitution of the United States, in that the commission is without authority to fix minimum rates; also that sections 3906 and 3908, Rev. Codes 1921, violate the Fourteenth Amendment to the Constitution of the United States. These allegations are denied by the answer. The complaint alleges, and the answer admits, that the utility has not and will not comply with such order unless it is determined in this action that such order is valid, and that, unless restrained, the Attorney General will institute criminal proceedings for the enforcement of such order.

The commission found that the schedule of rates of the company is just and reasonable, and made the following order:

"It is ordered that Schedule 4-A, sheet 2, filed by the Great Northern Utilities Company with the Commission on November 19, 1928, stating rates for natural gas service available for all classes of service at Shelby, Toole County, Montana, be not concurred in and that said Schedule 4-A, sheet 2, shall be, and it is hereby disapproved and rejected. It is further ordered that the Great Northern Utilities Company shall on or before the first day of February, 1929, file with the Commission a schedule of rates for natural gas service at Shelby, Montana, effective as of February 1, 1929, and until further order of the Commission, which schedule of rates shall be embodied in a tariff known as Tariff No 4, as follows, to-wit:

First 10,000 cubic feet Next 10,000 ' ' Next 30,000 ' ' Next 250,000 ' ' All over 300,000 ' '

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