Lone Star Gas Co. v. State, 7664.

• Decision Date: 30 April 1941
• Docket Number: No. 7664.,7664.
• Citation: 153 S.W.2d 681
• Parties: LONE STAR GAS CO. v. STATE et al.
• Court: Texas Supreme Court

Page 681

153 S.W.2d 681

LONE STAR GAS CO. v. STATE et al.

No. 7664.

Supreme Court of Texas.

April 30, 1941.

COPYRIGHT MATERIAL OMITTED

Error to Court of Civil Appeals of Third Supreme Judicial District.

Suit by the State of Texas and the Railroad Commission of Texas against the Lone Star Gas Company to restrain defendant from violating a gas rate order of the Commission. To review a judgment of the Court of Civil Appeals, 129 S.W. 2d 1164, reversing a judgment which annulled the order and permanently enjoined its enforcement and rendering judgment for the State upholding the order, the Lone Star Gas Company brings error.

Judgment of the District Court reversed, judgment of the Court of Civil Appeals reversed in part and affirmed in part, and cause remanded to the District Court for a new trial.

Roy C. Coffee and Marshall Newcomb, both of Dallas, Ogden K. Shannon, of Ft. Worth, and Ben H. Powell, Black, Graves & Stayton, and Charles L. Black, all of Austin, for plaintiff in error.

Gerald C. Mann, Atty. Gen., and Grover Sellers, Hugh Q. Buck, Morris C. Hodges, Geo. W. Barcus, James P. Hart, R. W. Fairchild, Ocie Speer, Asst. Attys. Gen., and A. S. Rollins, of Greenville, W. F. Moore, of Paris, Wm. McCraw, of Dallas, and Alfred M. Scott, of Austin, for defendants in error.

CRITZ, Justice.

This is a gas utility rate case. As it reaches us it involves principally the question of confiscation. The case has had a rather checkered career, as will appear from the opinion which follows.

It appears that after a very extended hearing before it and its agencies, duly constituted, the Railroad Commission of Texas, hereinafter called the Commission, entered an order fixing a gas rate of 32¢ to be applied at all city gates of cities in Texas served by the Lone Star Gas Company.

Very shortly after the above gas rate order was promulgated by the Commission, the Gas Company filed a suit in the United States District Court at Austin, Texas, attacking the above rate order and seeking to enjoin its enforcement upon the ground, generally stated, that it was confiscatory as applied to the properties and business of the Gas Company, and therefore violative of the Equal Protection clause and the Due Process of Law clause of the Fourteenth Amendment to the Federal Constitution, and of similar guaranties contained in the Bill of Rights of the Texas Constitution. In addition to the constitutional ground of attack above mentioned, the Gas Company attacked the rate order in the United States District Court as unreasonable and unjust as applied to its properties and business in this State.

In addition to the attacks above detailed, the Gas Company attacked the above rate order in the United States District Court on the alleged ground that it was engaged in interstate commerce in its business and operations in transporting and selling gas in Texas and Oklahoma, and therefore the Texas Railroad Commission was without jurisdiction in the premises. This attack has been overruled by the United States Supreme Court, and will not be further referred to. Lone Star Gas Co. v. Texas et al., 304 U.S. 224, 58 S.Ct. 883, 82 L.Ed. 1304.

After the above-mentioned suit was filed in the United States District Court at Austin, the State of Texas and the Railroad Commission filed this suit in a state district court in Travis County, Texas, claiming the right to have the matters presented to the United States District Court by the Gas Company litigated and determined by a state court. By their petition in the state court the State and the Railroad Commission, who will hereinafter be referred to as the State, prayed that the Gas Company be restrained from violating the gas rate order above described. Also, the State prayed that it be enjoined from enforcing such rate order pending final judgment.

After the filing of the suit in the state court that court entered the order prayed for by the State staying the enforcement of this gas rate order pending final judgment. Also, the federal district court entered an order restraining the above rate order pending final judgment in the state courts. So far as we know, the case in the United States District Court is still pending there awaiting the action of the state courts in this case. We shall not again refer to the case pending in the federal district court.

After the happening of the above events all parties appeared in the state district court and filed pleadings and joined issues. The Gas Company properly assumed the role of plaintiff, and the State properly assumed the role of defendant. The Gas Company attacked this rate order in the state court on substantially the same grounds that it had theretofore attacked same in the United States District Court. The case in the state district court, which is this case, was finally tried in such court, where it was submitted to a jury on one special issue. The jury answered this special issue in favor of the Gas Company, and based on such answer the district court entered a judgment annulling the above gas rate order, and permanently enjoining its enforcement.

The State appealed the above judgment to the Court of Civil Appeals for the Third District, at Austin. On final hearing in that court the judgment of the district court was reversed, and judgment rendered for the State, in all things upholding the above gas rate order. State v. Lone Star Gas Co., 86 S.W.2d 484.

In due time the Gas Company made application to this Court for writ of error. Such application was duly considered by this court and "Refused."

After the application for writ of error had been finally refused by this Court, the Gas Company appealed to the United States Supreme Court from the judgment and opinion of the Court of Civil Appeals. The appeal was granted, and on final hearing in the United States Supreme Court the judgment of the Court of Civil Appeals was reversed, and the cause remanded to that court for further proceedings "not inconsistent with" the opinion of the United States Supreme Court. Lone Star Gas Co. v. Texas, 304 U.S. 224, 58 S.Ct. 883, 82 L. Ed. 1304.

After the happening of the above events the case was again briefed and argued in the Court of Civil Appeals, and that court again rendered judgment, as it had in the first instance, reversing the judgment of the district court and rendering judgment for the State, in all things upholding the gas rate order here under attack. State v. Lone Star Gas Co., 129 S.W.2d 1164.

Lone Star Gas Company again applied to this court for writ of error, and such writ was granted. The case has been duly briefed, argued, and submitted in this Court.

In its original opinion, from which the appeal was prosecuted to the United States Supreme Court, the Court of Civil Appeals made numerous rulings on law questions presented to it in that appeal. At this point we deem it expedient to state certain of these rulings.

1. As we interpret the first opinion of the Court of Civil Appeals, it holds that the statutory appeal provided by Article 6059, R.C.S.1925, the statute under which this case was appealed from the Railroad Commission to the district court, "to determine whether a rate order is unreasonable and unjust" contemplates a "de novo" trial in the district court, as contradistinguished from a trial which "may mean merely the correction of nonpermissible error." [86 S. W.2d 499.] In order that this opinion may clearly reflect the original holdings of the Court of Civil Appeals on the question as to the kind and character of trial contemplated by Article 6059, supra, in cases of this kind, we quote the following from that opinion:

"The rate fixed by the commission is presumed to be valid, reasonable, and just until it is declared otherwise by a court of competent jurisdiction. Railroad Comm. v. Uvalde Construction Co. (Tex.Civ.App.) 49 S.W.(2d) 1113. In order to overcome this presumption in favor of the validity of the rate on the constitutional ground of confiscation, the burden of proof rests heavily upon appellee. Dayton P. & L. Co. v. Pub. Utilities Comm., 292 U.S. 290, 54 S.Ct. 647, 78 L.Ed. 1267. And in order to set aside the rate as being unreasonable and unjust, article 6059 requires that appellee show by clear and satisfactory evidence that such rate is unreasonable and unjust as to it. A controversy immediately arises as to the proper interpretation to be given these rules and statutory requirements as to the burden and quantum of proof. The commission contends that the rate must be sustained against the attack that it is confiscatory and unreasonable and unjust, because it does not allow a reasonable return on the fair value of the property, when it is shown to be based upon substantial evidence adduced before the commission, and that only the evidence adduced before the commission on the rate hearing may be considered on appeal to the court. On the other hand, appellee contends that the hearing on appeal to the court of such issues is de novo, and that `due process of law requires submission to a judicial tribunal for determination upon its own independent judgment as to both law and facts, according to the settled rules governing judicial action and decision.' Otis Elevator Co. v. Indus. Comm., 302 Ill. 90, 134 N.E. 19, 21; Ohio Valley Water Co. v. Ben Avon Borough, 253 U.S. 287, 40 S.Ct. 527, 64 L.Ed. 908; Reagan v. Farmers' Loan & Trust Co., 154 U.S. [362] 363, 14 S.Ct. 1047, 38 L.Ed. 1014. As regards the rate-making power of the commission, the Texas courts have adopted this wider scope of review. Railroad Comm. v. H. & T. C. R. R. Co., 90 Tex. 340, 352, 38 S.W. 750; Railroad Comm. v. Weld & Neville, 96 Tex. 394, 403, 73 S.W. 529; Gulf, C. & S. F. Ry. Co. v. Railroad Comm., 102 Tex. 338, 113 S.W. 741, 116 S.W. 795; Railroad Comm. v. San Antonio Compress Co., (Tex.Civ.App.) 264 S.W. 214 (writ refused Id., 114 Tex. 582, 278 S.W. 1115); Houston Chamber of Commerce v. Railroad Comm. (Tex.Civ. App.) 19 S.W.(2d) 583, affir...