Newton v. Consolidated Gas Co of New York Consolidated Gas Co of New York v. Newton 288, s. 257

• Decision Date: 06 March 1922
• Docket Number: Nos. 257,258,s. 257
• Parties: NEWTON, Atty. Gen. of New York, et al. v. CONSOLIDATED GAS CO. OF NEW YORK. CONSOLIDATED GAS CO. OF NEW YORK v. NEWTON, Atty. Gen. of New York, et al. (two cases). , and 288
• Court: U.S. Supreme Court

258 U.S. 165

42 S.Ct. 264

66 L.Ed. 538

NEWTON, Atty. Gen. of New York, et al.

v CONSOLIDATED GAS CO. OF NEW YORK.

CONSOLIDATED GAS CO. OF NEW YORK

v. NEWTON, Atty. Gen. of New York, et al. (two cases).

Nos. 257, 258, and 288.

Argued Nov. 17 and 18, 1921.

Decided March 6, 1922.

[Syllabus from pages 165-166 intentionally omitted] Messrs. John A. Garver and William L. Ransom, both of New York City, for complaint.

Messrs. Wilbur W. Chambers, Terence Farley, and Charles E. Buchner, all of New York City, for defendant Newton.

[Argument of Counsel from pages 167-169 intentionally omitted] Mr. John P. O'Brien, of New York City, for defendant Swann.

[Argument of Counsel from pages 169-170 intentionally omitted] Mr. Justice McREYNOLDS delivered the opinion of the Court.

The Consolidated Gas Company was organized in 1884 by consolidation of six corporations then manufacturing, distributing and selling gas in New York City and has continued to carry on the business making additions and extensions as required by the increasing demand. Chapter 125, Laws of New York 1906, required it to sell gas with illuminating power of 22 candles, at no more than 80 cents per 1,000 cubic feet. A suit brought soon after this act became effective to enjoin its enforcement, because confiscatory, was finally dismissed without prejudice (Willcox v. Consolidated Gas Co., 212 U. S. 19, 29 Sup. Ct. 192, 53 L. Ed. 382, 48 L. R. A. [N. S.] 1134, 15 Ann. Cas. 1034), and for many years thereafter the company supplied gas at the prescribed rate. January 16, 1919, it instituted the present proceeding against the Attorney General and other public officers. The bill alleges that the statutory rate is confiscatory—prevents and will continue to prevent a fair return on the property used—and prays for an injunction.

A master, appointed in May, 1919, heard testimony from day to day for eight months—about 20,000 printed pages—and presented this to the court with his report and opinion, May 5, 1920. Having considered the results of actual operations during all of 1918 and the first eight months of 1919, and wellknown subsequent conditions, he concluded:

'On the basis of the prices, rates of pay, and costs prevailing during the eight months beginning January 1, 1919, the cost of making and distributing gas has been such as to allow a very small, if any return, on even the actual investment; and since September 1, 1919, the cost of making and distributing gas has been increased in a number of respects so that the fair inference is that the complainant company now finds itself without any return upon the investment.

The conditions found by me have existed for more than a year last past, and to a lesser degree for at least a year before that time, and will continue for at least a considerable period of time, the end of which cannot now be forecast. Upon such a situation and such a prospect. I think that the complainant company has shown itself, clearly and beyond all reasonable doubt, entitled to relief from the statutory limitation on its rates, but that its rate of return should be calculated, not upon the present high reproduction cost of its property, with or without the deduction of observed or actual depreciation, in whatever manner computed, but upon the actual, reasonable, investment in the property devoted to the service of the complainant's consumers.'

In a carefully prepared opinion, while disagreeing with the master concerning some valuations and resolving all doubts against the company, the court held the prescribed rate had been confiscatory since January 1, 1918, and would continue so to be. 267 Fed. 231; 274 Fed. 986.

An amended decree—entered August 11, 1920—enjoined enforcement of the act upon condition 'that until March 1, 1921, or until the earlier promulgation of a gas rate applicable to the plaintiff by some competent authority of the state of New York, the plaintiff shall neither charge nor collect for the sale of gas in the city of New York more than the sum of one dollar and twenty cents per thousand cubic feet,' and also upon the further condition that it should impound, or adequately secure, collections above 80 cents per 1,000 cubic feet, for ultimate distribution in accordance with any rate so established.

A broad appeal was allowed in No. 257 September 9, 1920. In No. 258 an appeal allowed November 10, 1920, brings up those parts of the August decree which imposed conditions upon continuation of the injunction.

February 28, 1921, the trial court undertook to modify the August decree by directing that the excess derived from sales above 80 cents per 1,000 feet should be impounded until three months after determination of the appeal here, or until a rate should be fixed by competent state authority, and, further, that such sums should be subject to ultimate distribution 'as nearly as may equitably be done' in accordance with that rate and the approved principles and findings relative thereto. The appeal from this order is No. 288.

Equity rules 75 and 76 (33 Sup. Ct. xl, xli)¹ direct that records on appeal shall not set forth the evidence fully but in simple condensed form and require omission of nonessentials and mere formal parts of documents. Without apparent attempt to comply with these rules and with assent of appellee's counsel, appellants in No. 257 have filed a record of 21 volumes—20,000 printed pages—made up largely of stenographic reports of proceedings before the master with hundreds of useless exhibits and many thousand pages of matter without present value. This is indefensible practice, which we shall hereafter feel at liberty to punish to the limit of our discretion—possibly by dismissal of the appeal. These rules were intended to protect the courts against useless, burdensome records and litigants from unnecessary costs and delay. Counsel ought to comply with them, and trial courts should enforce performance of this plain duty.

The fundamental question presented for determination was whether the 80-cent rate had been confiscatory under conditions existing during 1918 and 1919 and probably would continue so to be. Considering the rulings here in Willcox v. Consolidated Gas Company and other cases, the answer required little more than an appreciation of facts not very difficult to ascertain. The master's report and opinion disclose careful and intelligent consideration of the whole matter. 'Resolving all doubts against the plaintiff' and using valuations 'pared down unsparingly,' the trial court agreed with the master's ultimate findings and ruled that to enforce the statute would result in confiscation. Since March 30, 1921, the Public Service Commission has had power to prescribe rates for appellee unrestricted by the maximum specified in the act of 1906; but no such action has been taken. It did, however, authorize a rate of $1.40, instead of 80 cents, for another company operating in New York City, effective after August 1, 1920, and has thus indicated its informed judgment. See Morrell v. Brooklyn Borough Gas Co. (Appeal No. 1, July 14, 1921) 231 N. Y. 405, 132 N. E. 130. We are, of course, aware of the enormous increase in cost of labor and materials since this court declared that appellee might possibly earn 6 per centum under the 80-cent rate. In view of all these things, only very cogent reasons would justify complete reversal of the challenged decree. The points relied upon by appellants in No. 257 and their supporting arguments have been considered, and we think no such reasons are shown. To discuss all of these would subserve no sufficient purpose—only a few present questions of general interest.

Appellants earnestly insist that they were denied fair and impartial trial both by the master and the court. So far as it relates to the court, we dismiss the suggestion as frivolous. Undoubtedly during the many months devoted to...