Peoples Gas Light & Coke Co. v. Slattery

• Decision Date: 07 February 1940
• Docket Number: No. 24836.,24836.
• Citation: Peoples Gas Light & Coke Co. v. Slattery, 373 Ill. 31, 25 N.E.2d 482 (Ill. 1940)
• Court: Illinois Supreme Court
• Parties: PEOPLES GAS LIGHT & COKE CO. v. SLATTERY et al.

373 Ill. 31

25 N.E.2d 482

PEOPLES GAS LIGHT & COKE CO.

v.SLATTERY et al.

No. 24836.

Supreme Court of Illinois.

Dec. 12, 1939.

As Modified on Denial of Rehearing Feb. 7, 1940.

Suit by the Peoples Gas Light & Coke Company against James M. Slattery and others, members of the Illinois Commerce Commission, and another, to enjoin defendants from enforcing certain rates for gas in the City of Chicago.From a decree for complainant, the defendants appeal.

Reversed and remanded with directions.

STONE and JONES, JJ., dissenting.Appeal from Circuit Court, Cook County; Stanley H. Klarkowski, judge.

Otto Kerner, Atty. Gen., and Barnet Hodes, Corp.Counsel, of Chicago (Montgomery S. Winning, of Springfield, Harry R. Booth, W. Robert Ming, Jr., Thomas A. Keegan, John P. Barnes, Jr., and Frederick Zazove, all of Chicago, and William F. Schulz, Jr., of Springfield, of counsel), for appellants.

Cooke, Sullivan & Ricks, Wilson & McIlvaine, and Sidley, McPherson, Austin & Burgess, all of Chicago (George A. Cooke, Francis L. Daily, Edward H. Fiedler, John M. Connery, James T. Mullaney, William P. Sidley, James F. Oates, Jr., John P. Wilson, Clay Johnson, and Joseph R. Gray, all of Chicago, of counsel), for appellee.

GUNN, Justice.

This is a direct appeal from a decree of the circuit court of Cook county, entered on the complaint of the Peoples Gas Light and Coke Company, appellee, enjoining appellants, members of the Illinois Commerce Commission, and Otto Kerner, Attorney General, from enforcing against appellee certain rates for gas in the city of Chicago, on the ground that such rates deprive appellee of its property without due process of law, in violation of the State and Federal constitutions.In its complaint the appellee, hereafter referred to as the company, alleged that after the imposition of an additional three per cent tax upon its gross receipts in 1935, the existing rate schedule (No. 17) had become confiscatory and that the Illinois Commerce Commission, hereafter referred to as the commission, had repeatedly refused to permit any increase.The case involves the validity of a statute and the construction of the State and Federal constitutions.

The rates involved are those contained in the company's schedule ICC No. 17, which became effective April 15, 1934.On July 1, 1935, the company became subject to the three per cent public utility tax upon its gross receipts, amounting to about $800,000 per year.On July 16, 1935, the company filed with the commission a new schedule of rates (No. 18) proposing a flat increase of three per cent to cover the amount of that tax.On August 7, 1935, the commission entered an order suspending schedule No. 18.After hearing evidence, the commission, on June 12, 1936, entered a final order permanently suspending schedule No. 18.On June 26, 1936, the company filed with the commission schedule No. 19, proposing an increase in rates from 58 cents to 90 cents per month for the first two therms of gas used, and also an increase from 60 cents to 90 cents in the minimum monthly bill.This would have increased the company's revenue about $3,000,000 per year.The commission entered an order on July 1, 1936, suspending schedule No. 19 until November 24, 1936, and set the case for hearing for July 15.On that date, the commission received all the evidence that had been introduced in the case involving schedule No. 18, and the company introduced certain additional testimony and rested its case.On July 24, 1936, the company petitioned the commission to install the rates in schedule No. 19 as temporary rates until the entry by it of a final order.The commission entered an order on August 21, 1936, denying this petition.On September 1, 1936, the company filed its complaint in equity in the circuit court of Cook county, against the members of the commission and the Attorney General, reciting all the proceedings before the commission, and alleging that the rates in schedule No. 17 were so low as to deprive the company of its property without due process of law, and sought relief by temporary and permanent injunction to restrain the defendants from enforcing such rates against the company.It was alleged that the present value of the company's property was $156,000,000, and that it was entitled to a return thereon of seven per cent, and that by reason of the commission's suspension of the increased rates in schedule No. 19 the company was being continuously deprived of a fair return upon the value of its property by more than $3,000,000 a year, which loss was irretrievable, and that there was no adequate remedy to protect it against such loss except in a court of equity.The complaint further alleged that section 68 of the Public Utilities act, Ill.Rev.Stat.1937, c. 111 2/3 § 72, in so far as it purported to prohibit the exercise of equity jurisdiction in such a case, was invalid as a direct violation of section 12 of article 6 of the Illinois constitution, Smith-Hurd Stats., which vests the circuit courts with original jurisdiction in equity, and also contained other allegations pertinent to the character of the case.

The defendants filed their answer to the complaint September 10, 1936, denying the inadequacy of the existing rates, alleged that the circuit court lacked jurisdiction, and that the suit was brought prematurely.The answer also alleged that the value of the company's property did not exceed $120,000,000, and that a fair and just rate of return would not exceed six per cent, and that the company, for the year 1936, would earn more than that, and that the existing rates were fair and reasonable.

The company applied to the circuit court for a temporary injunction supported by affidavit, and counter-affidavits were filed by the commission.On October 23, 1936, the court granted a temporary injunction restraining the defendants, pending final hearing, from enforcing the rates in schedule No. 17, upon condition that the company would not charge rates in excess of those in schedule No. 19, and required the company to impound monthly, in a bank, as a special fund subject to the order of the court, the difference between the existing rates and schedule No. 19, and provided for refunds of the impounded money to the consumers in the event the company should fail to establish the rates in schedule No. 17 were confiscatory.On appeal, the Appellate Court for the First District entered an order staying the effect of the temporary injunction, and, on December 8, 1936, entered a judgment vacating the injunction.People's Gas Light & Coke Co. v. Slattery, 287 Ill.App. 379, 5 N.E.2d 285.To review that judgment the company, on December 11, sued out of this court a writ of error and applied for a supersedeas, and the commission moved to dismiss the writ for want of jurisdiction.On February 16, 1937, this court denied a supersedeas but took the case under advisement, together with the motion to dismiss.Meanwhile the commission further suspended schedule No. 19 until May 24, 1937.

On January 20, 1937, the circuit court referred the cause to a master for hearing.The commission also conducted its hearing as to schedule No. 19.On March 4, 1937, the parties stipulated that the evidence introduced and to be introduced before the commission should be promptly introduced before the master in chancery, and this was done.The commission entered its final order May 21, 1937, holding that the existing rates were reasonable, and permanently cancelled schedule No. 19.On May 25, 1937, the company filed in the circuit court its amended and supplemental complaint, reciting all occurrences subsequent to the filing of the original complaint, again alleging the existing rates were confiscatory and prayed for additional relief against the enforcement of the final order of the commission on schedule No. 19.The company did not appeal from the ruling of the commission on schedule No. 19.Answers were filed and additional evidence taken, and on September 10, 1937, the master submitted his report to the parties and after passing upon affellants' objections filed it with the court.On October 4, 1937, the company filed its motion in this court to dismiss its writ of error, on the ground the case had become moot and it was accordingly dismissed.After hearing arguments on exceptions to the master's report, the circuit court, on January 26, 1938, filed its opinion finding the issues in favor of the company.On January 31, 1938, the commission moved the court to rerefer the cause to the master for the introduction of additional evidence, but this motion was overruled.On February 4, 1938, the chancellor entered a final decree, finding the circuit court had jurisdiction of the parties and of the subject matter, and that schedule No. 17, and rates contained therein, were confiscatory and in violation of both State and Federal constitutions, and that section 68 of the Public Utilities act, in so far as it purported to deny jurisdiction of courts of equity, was unconstitutional and void, and that the company had no adequate remedy except by proceeding in equity and would suffer irreparable injury unless an injunction should issue restraining the enforcement of the rates set out in schedule No. 17.The final decree restrained the commission from enforcing schedule No. 17 against the company and enjoined the final order of the commission upon schedule No. 19 and the provisions of the Public Utilities act, to the effect that the company be required to adhere to those rates found reasonable in that hearing.The final decree also required the company, pending final disposition of the cause on appeal, to deposit monthly, as a special fund, the difference between the rates set forth in schedule No. 17 and any money collected by the company in excess of those rates, in like manner as provided in the temporary restraining order.

The points chiefly relied upon for reversal are that this suit was prematurely brought;...