Lowell Gas Co. v. Dep't of Pub. Utilities

Citation84 N.E.2d 811,324 Mass. 80
CourtUnited States State Supreme Judicial Court of Massachusetts
Decision Date11 March 1949
PartiesLOWELL GAS CO. v. DEPARTMENT OF PUBLIC UTILITIES.

OPINION TEXT STARTS HERE

Reservation and Report from Supreme Judicial Court, Suffolk County.

Bill in equity by Lowell Gas Company against Department of Public Utilities to annul a rate order of the department on ground that it is confiscatory and unlawful. A single justice reserved and reported the case upon the pleadings, a stipulation as to dates, and rulings denying six motions of the department.

Interlocutory decrees affirmed and final decree entered annulling order of the department.

Before QUA, C. J. and LUMMUS, DOLAN, WILKINS, and WILLIAMS, JJ.

R. G. Dodge and E. L. Twomey, both of Boston, for plaintiff.

D. H. Stuart, Asst. Atty. Gen., for defendants.

WILKINS, Justice.

This is a bill in equity under G.L.(Ter.Ed.) c. 25, § 5, to annul a rate order of the department of public utilities on the ground that it is ‘confiscatory and unlawful.’ The plaintiff was incorporated by St.1849, c. 234, ‘for the purpose of manufacturing and disposing of gas in the city of Lowell, and its immediate vicinity,’ and has for many years supplied gas in that area. On December 12, 1946, it filed with the department a schedule of increased rates, which was disallowed in an order dated April 15, 1947, containing an authorization to file a new schedule of lesser increases to become effective May 1, 1947. The plaintiff filed the new schedule, without prejudice to its contention that the order was unlawful. A demurrer to the bill of complaint was overruled, the case was referred to a master, and the department appealed. There was a hearing before the master, who filed a report and a supplemental report. An interlocutory decree was entered denying six motions of the department, four to recommit the case to the master, one to reopen the hearing, and one to amend the order of reference. Another interlocutory decree overruled the department's exceptions and confirmed the reports. The single justice reserved and reported the case upon the pleadings, a stipulation as to dates, and the foregoing rulings, ‘such decrees to be entered as justice and equity may require.’ G.L.(Ter.Ed.) c. 214, § 31.

The bill alleges, with supporting factual allegations, that the rate order ‘is confiscatory and unlawful in that it prevents the plaintiff from receiving a reasonable return on the fair value of its property and has the effect of depriving the plaintiff of property without due process of law contrary to arts. 10 and 12 of the Declaration of Rights and to the Fourteenth Amendment to the Constitution of the United States.’ Other allegations are that the order contains errors in computation and an error in law in including the anticipated amount of revenue to be received by the plaintiff on its merchandise business. The prayers are that the order be annulled, and that, pending final disposition, the order be stayed.1

The department's answer, which was filed without waiving its demurrer, in part alleged that ‘all allegations as to the fair value of the company's plant are not material in that a court is not bound to consider evidence of the fair or historical value of the company's plant in the determination of rates'; that ‘the legality of the department's order must be judged by evidence before the department, and not by matters that have taken place since the hearing before the department and since its order was made’; that ‘the company is only entitled to rates that permit the company to operate successfully, maintain its financial integrity, attract capital and compensate its investors for the risks assumed’; that the increased revenues providedin the order ‘were, when added to a conservative estimate of net earnings based on the experience and evidence of the plaintiff, sufficient to attract capital to the company’; and that ‘no constitutional question is involved in the rate making process which is solely an exercise of the police powers of the State by its duly authorized regulatory body.’

The Demurrer.

The demurrer was general to the whole bill, and properly was overruled if any case for relief is stated in the bill. Lydia E. Pinkham Medicine Co. v. Gove, 298 Mass. 53, 57, 9 N.E.2d 573;Bleck v. East Boston Co., 302 Mass. 127, 129, 18 N.E.2d 536;O'Connor v. City of Brockton, 308 Mass. 34, 36, 30 N.E.2d 842. In overruling it there was no error. Of the grounds now relied on, grounds 2 and 3 referred respectively to two paragraphs of the bill which were later amended, and those paragraphs as they stood before amendment are not in the record. Notwithstanding the department's contention, the demurrer in no event could raise any question of a ‘variance’ between the bill and the master's findings. Likewise of no avail are those grounds which, in general, (ground 10) or in particular respects (grounds 4 to 7, inclusive), set up that the bill fails to summarize the evidence before the department upon issues of which the plaintiff seeks redetermination. The department mistakenly relies upon the last paragraph of Equity Rule 34, 252 Mass. 610, which specifically refers only to review of orders of the department relating to the promotion and sale of securities. St.1921, c. 499; see now G.L.(Ter.Ed.) c. 110A, § 13, as appearing in St.1932, c. 290, § 1, as amended by St.1936, c. 68. Ground 9, asserting that the bill erroneously seeks a trial de novo upon issues of fact other than those involving the constitutionality of the department's order,’ misconstrues the allegations of the bill.

The remaining grounds are (ground 11) that the bill erroneously seeks to review findings of fact of the department’ and (ground 8) that the bill contemplates a trial de novo of the facts on the issues of confiscation and unlawfulness, and fails to show that these issues should not be determined upon the evidence received by the department. In so far as ground 8 seeks to delimit the scope of admissible evidence, it could not furnish a valid reason for sustaining the demurrer. Both grounds could be dismissed by saying that the allegations of the bill, which contains no copy of the order, do not disclose that the order does not show on its face that it is confiscatory. Even on these contentions of the department the case could proceed to hearing for the purpose of introducing the department's order in evidence. Inasmuch, however, as these two grounds involve the principles underlying the general subject of review in this court of rate regulation by the department, it is convenient at this point to consider all questions they seek to raise. These questions and related matters seem to be: (1) Whether the reviewable questions include those arising under the State and Federal constitutions; (2) if constitutional questions are open here, whether the findings of the department are conclusive; and (3) if the findings are not conclusive, whether, under the statute, the questions reviewed are to be determined exclusively upon the evidence introduced before the department, or are to be determined also upon such additional evidence as may be introduced by either party.

This court is given ‘jurisdiction in equity to review, modity, amend or annul any ruling or order’ of the department, ‘but only to the extent of the unlawfulness of such ruling or order.’ G.L.(Ter.Ed.) c. 25, § 5. This, we have said in cases involving no constitutional question respecting rates, does not enable us to review or revise pure findings of fact but empowers us to deal with rulings or orders of the department only to the extent that they are shown to be erroneous in law. Boston & Albany Railroad v. New York Central Railroad, 256 Mass. 600, 617, 618, 153 N.E. 19, order of department approving issue of bonds. New England Telephone & Telegraph Co. v. Department of Public Utilities, 262 Mass. 137, 141, 147, 159 N.E. 743, 56 A.L.R. 784, order requiring telephone service to be furnished where wires had not been pulled by the company. Boston & Albany Railroad v. Department of Public Utilities, 314 Mass. 634, 636, 51 N.E.2d 445, order that certain work upon a bridge was an alteration and not repairs. Lowell Gas Light Co. v. Department of Public Utilities, 319 Mass. 46, 47, 64 N.E.2d 640, order denying approval of proposed issue of stock. The same statement is to be found as to similar statutes in earlier cases, in only one of which were rates challenged as confiscatory by a public service company. Paine v. Newton Street Railway Co., 192 Mass. 90, 77 N.E. 1026, review under R.L. c. 112, § 100, of order of board of railroad commissioners approving an extension of street railway tracks. Fall River v. Public Service Commissioners, 228 Mass. 575, 580-581, 117 N.E. 915, 917, petition of a city under St.1913, c. 784, § 27, for review of order of the public service commissioners permitting the discontinuance of ‘strips of six tickets' by a street railway company. Donham v. Public Service Commissioners, 232 Mass. 309, 328, 122 N.E. 397, review under St.1913, c. 784, § 27, of order relating to fares. City Council of Salem v. Eastern Massachusetts Street Railway Co., 254 Mass. 42, 45, 149 N.E. 671, review under G.L. c. 161, § 142, of order of department refusing to approve a revocation of a track location by the city council.

The Donham case presented a situation which this court regarded as unique, 232 Mass. pages 318-319, 122 N.E. pages 401, 402. The receiver of a street railway company filed in abnormal times a schedule of rates which for the immediate future would not yield a ‘compensatory return upon the investment’. 232 Mass. page 319, 122 N.E. page 402. The public service commissioners disapproved that schedule and ordered the receiver to file another one (to be effective during a short trial period) which this court thought that there was good ground to believe would be as profitable, 232 Mass. page 323, 122 N.E. page 403. The receiver's bill was dismissed. In denying a contention that...

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