Kansas-Nebraska Natural Gas Co. v. State Corp. Commission
| Decision Date | 17 July 1970 |
| Docket Number | No. 45928,KANSAS-NEBRASKA,45928 |
| Citation | 205 Kan. 838,473 P.2d 27 |
| Parties | NATURAL GAS COMPANY, Inc., Appellee, v. STATE CORPORATION COMMISSION of the State of Kansas, Dale E. Saffels, Chairman, Jules V. Doty and John W. Cunningham (substituted for James O. Greenleaf), as Members of said Commission, and their Respective Successors in Office, Appellants, and Kaneb Pipe Line Company, Intervenor-Appellant. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. The mere fact that a party is permitted to intervene in a proceeding before the State Corporation Commission does not give it standing to seek judicial review of an administrative order of the commission.
2. To be entitled to judicial review of an order of the State Corporation Commission a party, who has been permitted to intervene in a proceeding before the commission, must show an immediate and pecuniary interest in the subject matter of the proceeding, that such interest is direct, not indirect and remote and that it was aggrieved by such order of the commission.
3. In an appeal from a district court judgment, setting aside an order of the State Corporation Commission approving the issuance and sale of common stock by a public utility, pursuant to an application filed under the provisions of K.S.A. 66-125, the record is examined and it is held: A public utility, which was granted leave to intervene in the commission proceedings on allegations that the applicant owns common stock in the intervenor and has expressed a desire to effect a merger of the two companies, does not possess the requisite interest contemplated within the terms of K.S.A. 66-118a, 66-118b and 66-118c to entitle it to judicial review of the commission's order under the facts and circumstances fully set forth in the opinion.
Sard Fleeker, Asst. Gen. Counsel, argued the cause, and Jack Glaves, Gen. Counsel, was with him on the briefs for appellants.
J. Evans Attwell, of Vinson, Elkins, Searls & Connally, Houston, Tex., argued the cause, and Lynn R. Coleman, Houston, Tex., George P. Nellans, Norton, Robert N. Partridge, and Jerry G. Elliott, of Foulston, Siefkin, Powers & Eberhardt, Wichita, were with him on the briefs for intervenor-appellant.
John F. Jones, of Anderson, Byrd, Richeson & Jones, Ottawa, argued the cause, and Richard C. Byrd, Ottawa, and Lon H. Bayer and J. D. Conway, Hastings, Neb., were with him on the briefs for appellee.
This is an appeal by Kaneb Pipe Line Company and the State Corporation Commission from a district court's judgment setting aside an order of the commission certificating shares of common stock issued by Kaneb.
Kansas-Nebraska Natural Gas Company, Inc., appellee, was granted leave to intervene in proceedings before the commission. The commission denied an application for rehearing and Kansas-Nebraska appealed to the district court of Phillips County.
The material facts can be briefly stated. On November 17, 1967, Kaneb filed an application with the commission, pursuant to the provisions of K.S.A. 66- 125, requesting the certification of some 20,566 shares of common stock which had been issued pursuant to two separate employee stock option plans. Kansas-Nebraska filed a petition to intervene, which was brought to the commission's attention at the commencement of the hearing on April 9, 1968. Kaneb objected to the intervention and the parties argued their respective positions before the commission. The commission staff counsel pointed out that under K.A.R. 82-1-213(i) admission as an intervenor should not be construed as recognition by the commission that such intervenor might be aggrieved by any order of the commission in such proceeding. Kansas-Nebraska was allowed to intervene and the hearing was held.
At the hearing Kaneb offered in evidence its verified application which set forth the stock option plans approved by its shareholders and by its board of directors. Kaneb also submitted annual reports filed with the commission, which indicated the shares of stock which had been issued under the stock option plans.
Neither Kansas-Nebraska nor the commission offered evidence.
The commission's order was filed May 15, 1968. The commission made findings of fact and conclusions of law and granted a certificate covering 22,159 shares of common stock previously issued by Kaneb.
The commission ruled in essence that its authority under the provisions of K.S.A. 66-125 is to determine whether the issuance of the securities is necessary for statutory purposes, and upon ascertaining the truthfulness of the statements contained in the application and that the stock will be used for the purpose for which its issuance is required, it then becomes the mandatory duty of the commission to issue the certification applied for as provided in 66-125, supra.
The commission found that Kaneb had furnished all requisite and necessary information required by the provisions of 66-125, supra, and that the issuance and sale of stock was necessary and required for the purposes stated in the application.
Commissioner Greenleaf dissented on the ground the commission lacked power to retroactively certificate the stock.
Kansas-Nebraska filed an application for rehearing, primarily on the ground that the commission's order was unlawful because the stock was void under the terms of 66-125 and could not be retroactively validated.
As we have previously indicated, Kansas-Nebraska appealed to the district court after the application for rehearing was denied. Kaneb intervened in the district court proceeding.
The district court adopted the findings of fact made by the commission and then held as a matter of law that the commission had no authority to authorize or approve the issuance of the stock, after the same had been issued, because Kaneb had failed to secure prior approval of the stock under the provisions of 66-125.
Before proceeding further with this opinion it should be said that we have had no occasion to consider the merits of the controversy since we are of the opinion Kansas-Nebraska had no standing to seek judicial review of the commission's order.
The standing of Kansas-Nebraska was put in issue when the commission and Kaneb filed motions to dismiss in the district court on the ground that Kansas-Nebraska did not have standing to seek judicial review since it did not have the requisite 'interest' nor was it an 'aggrieved' party in the proceedings.
The district court did not expressly rule on the motions to dismiss, but during the proceedings commented:
'* * * I don't know how the-these Kansas-Nebraska Natural Gas Company got into it other than from the record, but it appears the Corporation Commission permitted them to intervene in that case.'
This comment is the only clue as to the view of the district court concerning the standing of Kansas-Nebraska. It appears the district court refused to dismiss simply because the commission had permitted Kansas-Nebraska to intervene in the commission proceedings.
The record of proceedings before the commission discloses that, in support of its motion to intervene, Kansas-Nebraska argued that, since Kaneb had acquired twenty percent of the stock of Kansas-Nebraska with the avowed purpose of seeking a merger, it had a vital interest in the validity of Kaneb's stock which might be traded for Kansas-Nebraska stock in the event a merger was consummated. The commission made no findings or orders at this point in the proceedings, as to the status of Kansas-Nebraska. The only showing in the record indicating the position of the commission concerning the standing of Kansas-Nebraska is reflected in a colloquy between Commission Chairman, Saffels and staff counsel Johnson which is shown in the record as follows:
The commission's Rule, K.A.R. 52-1-213(i), defines 'intervenors.' The portion of the Rule pertinent to our question reads:
'* * * Admission as an intervenor shall not be construed as recognition by the commission that such intervenor might be aggrieved by any order of the commission in such proceeding.'
The purpose of the rule seems to be to afford a safeguard which enables the commission to pursue a commendable liberal policy in permitting participation by parties desiring to intervene in commission proceedings. It affords an intervening party an opportunity to show and the commission to hear evidence of any direct interest the party might have in the proceedings, that might be adversely affected by the commission's order without a precommitment by the commission with respect to standing.
We believe the rule serves a laudable purpose in protecting a party's right to show an interest without hindering orderly procedure in commission proceedings.
The rationale of the rule is not without supporting authority. In 2 Am.Jur.2d, Administrative Law, § 576, this statement appears:
'* * * Furthermore, the mere fact that a party was permitted to intervene in an administrative proceeding does not give him a standing to sue for relief in the courts, or to appeal under a statute granting each party to the proceeding a right to review; * * *' (p. 397.)
A discussion of the rule and cases in support thereof is found in 3 Davis,...
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