H. Earl Clack Co. v. Public Service Commission of State of Montana

• Decision Date: 19 June 1933
• Docket Number: 7146.
• Citation: 22 P.2d 1056,94 Mont. 488
• Parties: H. EARL CLACK CO. v. PUBLIC SERVICE COMMISSION OF STATE OF MONTANA et al.
• Court: Montana Supreme Court

22 P.2d 1056

94 Mont. 488

H. EARL CLACK CO. v. PUBLIC SERVICE COMMISSION OF STATE OF MONTANA et al.

No. 7146.

Supreme Court of Montana

June 19, 1933

Original proceeding for an injunction by the H. Earl Clack Company against the Public Service Commission of Montana, and Raymond T. Nagle, as Attorney General.

Permanent injunction issued in accordance with opinion.

John G Brown and L. V. Ketter, both of Helena, Donald Campbell, of Great Falls, and H. H. Schwartz, of Casper, Wyo., for plaintiff.

Raymond T. Nagle, Atty. Gen., and Jeremiah J. Lynch, Asst. Atty Gen., for defendants.

CALLAWAY Chief Justice.

This is an original proceeding in which the plaintiff seeks an injunction prohibiting the Public Service Commission of Montana and the Attorney General of the state from enforcing the provisions of chapter 184 of the Laws of 1933.

The title of the act is: "An Act Relating to Price Charged for Any Standard Petroleum Product and Establishing a Differential Basal Rate Point Within the State of Montana Providing for Procedure in the Determination of Price Under This Act, Defining Standard Petroleum Product to be a 'Public Utilty', Defining What is Included Within the Term 'Standard Petroleum Product', Construction to be Placed Upon This Act, Prescribing Duties of County Attorney, Providing Penalties for the Violation Thereof, and Repealing All Acts and Parts of Acts in Conflict Herewith."

Section 1 reads: "Any person, firm, company, association or corporation doing business within the State of Montana who shall charge or demand a higher price for any standard petroleum product from any person or customer within the State of Montana than is being charged by such person, firm, company, association or corporation for a like article of standard petroleum product to other persons or customers in the State of Montana or in any adjoining state shall be guilty of discrimination which is hereby declared to be a fraud, and any said person, firm, company, association or corporation, and their officers and agents participating guilty of a misdemeanor. When competent proof is offered, in the trial of any action under this Act, of a demand for or the receipt of a higher price for any standard petroleum product in this state by any person, firm, company, association or corporation than is charged for the same or a similar article of standard petroleum product of other persons or customers in the State of Montana or in any adjoining state at substantially the same time, the burden of proof will then be upon such person, firm, company, association or corporation, their officers or agents, on trial to prove that the difference in price was justified."

Section 2 reads: "'Standard Petroleum Product' referred to in this Act is hereby defined to be a 'Public Utility' within the meaning of this Act."

Section 3 provides that the term "'Standard Petroleum Product' *** refers to and includes gasoline, fuel oil, distillates, greases and lubricating oils."

Subsection (a) of section 3 directs the Publice Service Commission of Montana within thirty days after the approval of the act to establish one or more differential basal rate points within the state "to be used as a basis for determining gasoline and petroleum product rates" within this state, and subsection (b) authorizes the commission to make reasonable rules and regulations regarding the distribution of gasoline and petroleum products within the state, and provides that "within thirty (30) days' notice, a dissatisfied party or parties may appeal from the rulings of said Commission to Courts of competent jurisdiction for a review of the findings of said Commission."

Section 4 says the act is "intended to compel persons, firms, companies, associations or corporations doing business in the State of Montana dealing in standard petroleum products to treat all of their customers in the State of Montana on an equal with all of their customers in the State of Montana or adjoining states, and to promote the uniform application of the law of the State of Montana providing a license tax on all gasoline used by motor vehicles when traveling over the public highways, and this Act shall be liberally construed to accomplish that end."

Section 5 provides that upon written complaint made by a citizen to the county attorney of any county in which a discriminatory act has been committed, that officer shall promptly investigate and either "prosecute the action" or give to the complainant a written statement of his reasons for not doing so; and section 6 provides that any person, firm, company, association, or corporation, their officers or agents, violating any provisions of this act, shall be guilty of a misdemeanor and shall be punished by a fine of not exceeding $500.

Section 7 provides that, in addition to the penalty provided in the criminal action, "any customer of such person, firm, company, association and corporation or his assigns may bring a civil action in any county in which such offending corporation may be doing business, and recover therein not only actual damages for any violation of this Act, but also exemplary damages for such reasonable sum as the jury may deem proper punishment for the unlawful practice of discrimination as herein defined."

It is alleged in the complaint, among other things, that the plaintiff corporation is engaged in the business of selling standard petroleum products in Montana, North Dakota, Idaho, and Washington, wherein it operates approximately forty retail and forty-five wholesale plants in which it employs a large number of persons and has over a million dollars invested; that the conditions existing in each of plaintiff's plants and stations in Montana and in adjoining states with respect to the original cost of its prodduct, freight rates, transportation charges, hauling, handling, delivering, rent, property investment, insurance, taxes, wages, competition, credits, and general operating expenses are not uniform; that its plants and stations in Montana and the adjoining states are operated in widely scattered localities, encompassing great distances, and under widely diversified and constantly changing conditions, and that it is necessary to the successful operation of plaintiff's business and the preservation of its property and business that plaintiff sell its product at each of the plants or stations in Montana and other adjoining states at prices fixed and determined by it to be the proper charges in the light of existing conditions and to change its prices at any of its plants or stations when it is necessary to do so to meet the changing conditions existing thereat; that all of the conditions existing at each plant and station have relation to and are properly to be taken into consideration in fixing and determining the price at which it will sell its product; plaintiff must charge therefor a price which will vary and be influenced by existing conditions; and the price to be charged at any particular plant or station within Montana cannot be controlled or fixed by the price charged at its other plants and stations, nor by the price at which it sells its products in adjoining states.

It is alleged, and admitted by the defendants, that the establishment of a differential basal rate point has little or no relation to the conditions and factors alleged by plaintiff as entering into the cost of conducting business at its various stations and plants, and does not make conditions uniform at plaintiff's plants and stations in Montana or in adjoining states, nor can a proper differential in the prices at which plaintiff sells and will sell its product at its various stations and plants be established, based on or determined solely with reference to the differential basal rate point, and if plaintiff is compelled to sell its product at a price which does not take into consideration the conditions existing at each of its plants and stations independent of the others which enter into the cost of doing business thereat and which affect the price at which plaintiff's products can be sold at a profit thereat, plaintiff's profits may or will be reduced. It is alleged and admitted that the defendant commission threatens to and will, unless restrained by this court, enforce the act.

Plaintiff alleges that if it is compelled to sell its products at a price which does not take into consideration the conditions existing at each of its stations or plants independently of the others, and which enter into the cost of doing business thereat, and which affect the price at which plaintiff's products can be sold at a profit, plaintiff will be deprived of its property without due process of law, and of its freedom to contract, and it will be denied the equal protection of the law. The complaint makes specific attacks upon the act, wherein alleged conflicts with the provisions of the federal and state Constitutions are set forth.

In the answer it is alleged that the people of Montana own and operate approximately 120,000 motor vehicles consuming in the operation thereof about seventy million gallons of gasoline at a retail cost of about $15,500,000, from which the license taxes derived from the sales are about $3,500,000 annually; that regarded as an article of commerce gasoline enters largely in the lives, welfare, and happiness of the people of Montana; that the state is engaged in the construction of highways 1,500 miles or more in length, which will not be completed for several years to come, the cost of construction of which must be met largely, if not entirely, from such tax.

It is also alleged that in many instances people living in places far removed from oil refineries pay less for gasoline than people living in close proximity to an oil refinery; that the...