Michigan Consolidated Gas Co. v. Michigan Public Service Commission

• Decision Date: 24 July 1973
• Docket Number: No. 9,9
• Parties: MICHIGAN CONSOLIDATED GAS COMPANY, a Michigan corporation, Plaintiff-Appellee, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellant.
• Court: Michigan Supreme Court

Page 210

209 N.W.2d 210

389 Mich. 624

MICHIGAN CONSOLIDATED GAS COMPANY, a Michigan corporation, Plaintiff-Appellee, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellant.

No. 9.

Supreme Court of Michigan.

July 24, 1973.

Arthur R. Seder, Jr., Ellsworth G. Reynolds, Gary L. Cowan, John M. Veale, Matheson, Bieneman, Veale & Parr, Detroit, for plaintiff-appellee.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Robert J. Taube, Walter V. Kron, Asst. Attys. Gen., Lansing, for defendant-appellant.

Before the Entire Bench.

T. G. KAVANAGH, Justice.

This case was originally submitted to the Court in October, 1971.

This Court on its own motion dated September 12, 1972 ordered resubmission of the case and additional briefing of the following questions:

Assuming, arguendo, that provisions of § 26 of 1909 P.A. 300 vest 'jurisdiction' in the circuit court to issue an injunction such as the one in the instant case:

1. Are any provisions of the statute concerning the nature and scope of judicial review of the Public Service Commission's rate making process unconstitutional in light of article 6, § 28 and article 3, § 2 of the Michigan Constitution of 1963?

2. Assuming that judicial review is limited to review on the nature of certiorari under Michigan law, do Federal decision require more?

Subsequently oral argument was allowed and the case submitted at our March term 1973.

Following the first submission of this case I prepared and circulated an opinion for the Court which would reverse the court of appeals.

In that opinion, largely on the reasoning of In re Briggs, 178 Mich. 28, 144 N.W. 501 (1943), I concluded the temporary injunction issued herein was beyond the power of the circuit court sitting in this statutory review albeit described in the statute as sitting 'in chancery'. Justice Adams wrote and circulated an opinion for affirmance.

With apologies to Justice Adams and to whomever it was who first explained a change of mind with the observation 'Wisdom so often never comes that it ought never be rejected merely because it comes late', I now acknowledge that I have become persuaded that the review provided by 1909 P.A. 300, § 26(a); M.C.L.A. § 462.26; M.S.A. § 22.45 permits a reviewing court to exercise the full powers of a court of equity in such review, including the power to issue temporary as well as permanent injunctions. I do not perceive this to authorize the setting of rates, nor do I regard the temporary injunction issued herein to have done so.

In answer to the questions we posed on re-submission, I would hold

1. The review provided is in the nature of certiorari and does not contemplate the judiciary setting rates, but only preventing confiscation of property. This does not violate either article 6, § 28 or art. 3, § 2 of Const.1963.

2. Federal decisions do not require more than review in the nature of certiorari to effect due process in rate cases.

Accordingly, with the addition of the above answers to the proposed questions, I adopt the following opinion of Justice Adams:

I. The Proceedings

On April 11, 1968, Michigan Consolidated Gas Company filed a petition for rate increases with the Michigan Public Service Commission. Hearings commenced in July 1968, and continued through December 1968. 1967 was used as a test period to determine the reasonableness of the requested hikes. However, future increases and reductions beyond 1967 in the company's costs were also put into evidence.

On June 6, 1969, the commission allowed an increase, applicable only to industrial customers, of $4,179,683. On June 30, 1969, Michigan Consolidated appealed to the Ingham County Circuit Court. A preliminary injunction was requested to restrain the commission from interfering with rates which would produce $4,896,628 annually during the pendency of the suit over and above the $4,179,683 increase that had been allowed. The Attorney General also sought a temporary injunction to restrain the company from collecting any increase during pendency of the suit.

On August 1, 1969, the circuit court issued a temporary injunction granting a rate increase, in addition to that granted by the commission, in the amount of $2,854,992 annually. The court provided that, if the rate increase should ultimately be disallowed, a refund would be made to the company's customers. To insure the refund, the company was ordered to account separately for the extra money collected by it and to provide a bond of $3,000,000. The court reserved jurisdiction to determine appropriate interest rates and methods of refunding. The court's increase affected residential and commercial customers who had not been affected by the commission's order.

In its grant of a temporary injunction the circuit court followed the reasoning in General Telephone Co. of Michigan v. Public Service Commission, 341 Mich. 620, 632, 67 N.W.2d 882, 887 (1954):

'When failure to provide adequate rates in the past cannot be remedied by retroactive orders, it follows that every reasonable effort should be made by the commission to eliminate unnecessary delay and to pass judgment on facts that will not only reflect upon the present but a reasonable period in the future.'

The circuit court first noted that 'in the instant case the 'test year' utilized before the Commission was a year commencing almost two and a half years and terminating almost one and a half years prior to the issuance of the Commission's orders, thus virtually negating at the outset the statutory design of accomplishing speedy final determination of the issues involved.' Second, the court noted that, although the commission took into account future reductions in assessing a reasonable rate, it refused to take into account future increases in costs. The court concluded:

'Certainly at first blush it would appear to anyone steeped in 'due process' considerations that it is grossly unfair to include certain items of decreased cost in rate determination while at the same time to exclude items of increased cost.'

An interlocutory appeal was taken to the Court of Appeals. Prior to decision by that court, the matter was also remanded, in accordance with the statute, to the commission. In its February 11, 1960, statutory report to the circuit court, the commission agreed with the court with regard to the validity of the additional rate increases. However, the commission contended that its decision was Prospective only, based on new evidence, and did not include the rate increases allowed by the temporary injunction up to the date of its report. Contrary to these conclusions, the circuit court noted 'that all of the reasons stated by the Commission in its statutory report on remand in support of its present position, i.e., that Consolidated's capital structure as established in the rate order of June 6, 1969, should be amended to include the November 25, 1968, bond sale, Existed and were Foreseeable at the time the Commission entered its original order.' The circuit court, on July 21, 1970, rendered a final opinion in which it permanently continued in effect its injunction.

The Court of Appeals affirmed the circuit court's power to issue a preliminary

injunction. Appeal on leave granted was taken to this Court.

II. Did the Circuit Court have Jurisdiction to

Issue a Temporary Injunction pursuant to

1909, P.A. 300, § 26.

(a) Section 26(a)

The Ingham County Circuit Court is given chancery jurisdiction to hear appeals from the decisions of the commission by statute (M.C.L.A. § 462.26(a); M.S.A. § 22.45(a)):

'Any common carrier or other party in interest, being dissatisfied with any order of the commission fixing any rate * * * may * * * commence an action in the circuit court in chancery for the county of Ingham * * *. All suits brought under this section shall have precedence over any civil cause of a different nature pending in such court, * * * and the same Shall proceed, be tried and determined as other chancery suits * * * and the said circuit court in chancery is hereby given jurisdiction of such suits and empowered to affirm, vacate or set aside the order of the commission in whole or in part, and To make such other order or decree as the court shall decide to be in accordance with the facts and the law.' (Emphasis added.)

The portion of the statute that is emphasized is clear and unambiguous on its face. When a statute is clear and unambiguous, no construction is needed. There is no dispute between the litigants that general equity powers include the power to issue a temporary injunction. There is no direct statement in the statute limiting the circuit court's general equity powers. ¹ The commission maintains, however, that if the entire statute is properly construed, it does limit the court's power to issue a temporary injunction. It bases this claim on the following statutory language:

M.C.L.A. § 462.25: M.S.A. § 22.44:

'All rates, fares, charges * * * fixed by the commission and all regulations, practices and services prescribed by the commission shall be In force and shall be Prima facie, lawful and reasonable Until finally found otherwise in an action brought for the purpose pursuant to the provisions * * * of this act, * * *.' (Emphasis added.)

M.C.L.A § 462.26(b): M.S.A. § 22.45(b):

'No injunction shall issue Suspending or staying any order of the commission, except upon application to the said circuit court in chancery or to the judge thereof, notice to the commission having been given and hearing having been had thereon.' (Emphasis added.)

M.C.L.A. § 462.26(e): M.S.A. § 22.45(e):

'In all actions under this section the burden of proof shall be upon the complainant to show by clear and satisfactory evidence that the order of the commission complained of is unlawful or unreasonable, as the case may be.' (Emphasis added.)

(b) Section 25

The commission contends that under section 25, if the rates set by it are in force and Prima facie reasonable and lawful until Finally...