Northwestern Bell Telephone Co. v. Hilton

• Decision Date: 01 January 1921
• Docket Number: 15-17
• Citation: 274 F. 384
• Parties: NORTHWESTERN BELL TELEPHONE CO. v. HILTON. Atty. Gen., et al. TRI-STATE TELEPHONE & TELEGRAPH CO. v. SAME.
• Court: U.S. Court of Appeals — Eighth Circuit

274 F. 384

NORTHWESTERN BELL TELEPHONE CO. v. HILTON. Atty. Gen., et al.

TRI-STATE TELEPHONE & TELEGRAPH CO. v. SAME.

No. 15-17

United States District Court, D. Minnesota, Third Division.

January 1, 1921

Edmund A. Prendergast, of Minneapolis, Minn., and O'Brien Young, Stone & Horn, of St. Paul, Minn., for plaintiff Northwestern Bell Telephone Co.

Clarence B. Randall and O'Brien, Young, Stone & Horn, all of St Paul, Minn., for plaintiff Tri-State Telephone & Telegraph Co.

Clifford L. Hilton, Atty. Gen., and Henry C. Flannery, Asst. Atty Gen., for defendants.

BOOTH District Judge.

This is a motion to stay the proceedings in this court, under section 266 of the Judicial Code (Comp. St. Sec. 1243), based upon an action started in the state court of Ramsey county.

It appears that in 1915 or 1916 a proceeding was started before the Railroad and Warehouse Commission to investigate and determine a basis for reasonable rates to be charged by the telephone companies, and evidence was introduced as early as 1918 and as late as November, 1920; that up to the present time no evidence has been introduced on behalf of the state; that about November, 1920, a collateral inquiry was injected into this main proceeding by the telephone companies, in the way of application for increased rates temporarily; that that collateral inquiry was taken up and pursued by the Railroad and Warehouse Commission, and that an order was entered, on February 9, 1921, denying the application; that thereupon suits were brought in this court by the telephone companies, seeking to enjoin and restrain the Attorney General and the Railroad and Warehouse Commission from enforcing the order entered February 9, 1921, or from interfering with an attempt on the part of the telephone companies to increase their present rates. The matter is now pending before this court on a motion for a temporary restraining order, pending a hearing before an enlarged court of three judges for preliminary injunction. While that motion is pending here, and before a temporary restraining order has been issued, action is started in the state court of Ramsey county, asking for a mandatory injunction to compel the telephone companies to respect and abide by the order of the Railroad and Warehouse Commission of February 9, 1921, and also to respect and obey rates theretofore in force.

Section 266 of the Judicial Code provides:

'That if before the final hearing of such application (application for interlocutory injunction) a suit shall have been brought in a court of the state having jurisdiction thereof under the laws of such state, to enforce such statute or order, accompanied by a stay in such state court of proceedings under such statute or order pending the determination of such suit by such state court, all proceedings in any court of the United States to restrain the execution of such statute or order shall be stayed pending the final determination of such suit in the courts of the state.'

The language of that provision in section 266 evidently was framed more with a view to a new order that might be made, or a new statute that might be passed, rather than to an old statute that had already been in force for some time, or an old order that had been made and continued in force, and the purpose of the statute undoubtedly was that, when such new order was made or such new statute passed, and action was taken by the public utility to restrain the execution and enforcement of the statute and the order, a preliminary injunction might issue, if the facts warranted it, pending determination of the suit, as to whether such statute or order was unconstitutional and confiscatory. But if, while such a suit was pending in the federal court to obtain a preliminary injunction, action was commenced in the state court for the purpose of enforcing the new statute or the new order, and a stay of proceedings entered in the state court, staying the enforcement of the new statute or the new order, pending the suit, then the proceedings in the United States court would be stayed until the suit in the state court had terminated.

In the present instance there is no new statute which has been passed, and which is attacked; but the order which has been attacked is the order of February 9, 1921, by the Railroad and Warehouse Commission, and that order refused the application for increased rates, and determined that the present rates should remain in force and effect. That order must be read in connection with the statute then in force and now in force. Section 6 of chapter 152, Laws Minn. 1915, known as the Telephone Law (Gen. Stat. Minn. Supp. 1917, Sec. 4623-- 6), reads that--

'It shall be unlawful for any telephone company to collect or receive a greater or less rate or charge for any intrastate service rendered by it than the rate or charge named in the schedules on file with the commission, and no new rate shall take effect till the date named by the commission, which shall not be less than ten days after it is filed.'

The order and the statute must be connected together, must be considered together, and are attacked, as I construe the amended bill of complaint, in each of these suits now pending here. Now, when action is taken in the state court to cause a stay of proceedings in the federal court, the meaning of section 266, as I construe it, is that that action must be such in the state court that the same issues can be framed and the same questions considered and decided in the state court as have been raised by the pleadings in the federal court, and pending the determination of that suit in the state court the temporary relief that must be granted by the state court in a stay order must be of as broad a scope as the temporary relief which is asked in the federal court, where the suits have already been started.

It may be true that the issues raised in the state court, in this mandatory injunction suit, may be so framed as to raise all of the questions that are raised in the suits here in this court. I say that may be the case. I am not clear in my mind whether that is the case, but it might be assumed that it is the case. But, clearly, the stay order which has been entered in the state court is not of the same scope and character as the temporary relief which is demanded in this court on the application for a restraining order, and as demanded in this court on an application for a temporary injunction before the enlarged court of three judges. If counsel for defendants here would state in open court that the stay order in the state court would be construed as meaning that the order of the commission of February 9, 1921, as well as the provisions of section 6, chapter 152, the Telephone Law, would be suspended during the carrying on of the action in the state court, he would have a case brought within section 266 of the Judicial Code; but on the face of the order of the state court it is not of that scope, and since it is not of that scope the provisions of section 266 of the Judicial Code have not been complied with.

I do not know of any adjudicated cases in the reports in reference to this particular matter of actions in state courts staying proceedings in the federal courts under section 266 of the Judicial Code. I do remember, however, in the Kansas Natural Gas Company litigation, that a suit was commenced by the St. Joseph Gas Company against the Missouri commission, and it was sought to restrain the commission from putting into force and effect an order which the commission had made denying the application of the St. Joseph Gas Company to put into effect a schedule of rates. The St. Joseph Gas Company brought suit in the federal court, and made an application for a temporary injunction, and a hearing was set before three judges, at Council Bluffs. Judge Smith, Judge Campbell, of Oklahoma, and I sat. At that hearing counsel for the commission came into the court and stated, and had his papers with him, that an action had been commenced in the state court to determine the validity of the order of the Public Service Commission of Missouri, and that all proceedings under that order also had been stayed by the state court, and upon making that showing the hearing before the three judges was postponed until the determination of that state suit. Now, under the law of Missouri, a public service utility company may file a schedule of rates with the Public Service Commission, and unless the Public Service Commission within a certain specified time takes action to refuse the allowance of that schedule of rates, the rates go into force and effect of their own right; whereas, if within the limited time the Public Service Commission does take action, either on its own initiative or the initiative of some one interested, then an investigation is had and the schedule is suspended.

In the particular case that I referred to the Public Service Commission had taken action to prevent the going into effect of the new schedule of rates filed by the St. Joseph Gas Company, and when the state action was brought and a stay order was entered in the state court, it stayed the proceedings under the order of the Public Service Commission and, as a result, put into force and effect the new schedule of rates which had been filed by the St. Joseph Gas Company, pending the determination of the suit in the state court. That is the only instance that I know of where the suit in the federal court has been stayed by reason of action taken in the state court; and in that particular case the action was stayed because the suit in the state court was of such character that all of the issues could be determined, and also there was a stay entered whereby the new schedule of rates, which had been prepared and filed...