Peoples Natural Gas Co. v. Federal Power Commission

Decision Date16 February 1942
Docket NumberNo. 8048.,8048.
PartiesPEOPLES NATURAL GAS CO. et al. v. FEDERAL POWER COMMISSION.
CourtU.S. Court of Appeals — District of Columbia Circuit

Mr. Carl McFarland, with whom Mr. J. Edward Burroughs, Jr., was on the brief, both of Washington, D. C., for appellants.

Mr. Richard J. Connor, General Counsel, Federal Power Commission, with whom Mr. Charles V. Shannon, Attorney, Federal Power Commission, was on the brief, both of Washington, D. C., for appellee.

Before GRONER, Chief Justice, and MILLER and EDGERTON, Associate Justices.

EDGERTON, Associate Justice.

This appeal is from an order of the District Court which requires appellants, the Peoples Natural Gas Company and its president, to allow appellee, the Federal Power Commission, access to certain of the Company's books and records.

The Commission filed in the District Court a motion which states, among other things, that it has begun an investigation to determine whether the Company is a natural-gas company within the meaning of the Natural Gas Act,1 and whether the Company's rates and charges subject to the Commission's jurisdiction are unjust, unreasonable, unduly discriminatory, or preferential; that though the Commission has been given access to books and records which concern the Company's status as a natural-gas company, appellants have refused, despite subpoenas, to produce the books and records which are now demanded; and that these contain information regarding the cost of the Company's property, its expenses, and its revenues, all "essential to enable the Commission to determine whether the rates and charges of The Peoples Natural Gas Company subject to the jurisdiction of the Commission, are unjust, unreasonable, unduly discriminatory, or preferential."

The Natural Gas Act provides that all sales "subject to the jurisdiction of the Commission" must be at reasonable rates,2 and that when the Commission finds that a rate for such a sale is unreasonable, it may fix a reasonable rate to be charged thereafter.3 The Commission "may investigate any facts, conditions, practices, or matters which it may find necessary or proper in order to determine whether any person has violated or is about to violate any provision of this chapter,"4 and may "require the production of any books, papers, correspondence, memoranda, contracts, agreements, or other records" which it finds relevant to the investigation.5

The Commission's motion, apart from annexed exhibits, does not clearly allege any facts which show that the Commission had jurisdiction to demand these books and records. But in Paragraph IX the Commission annexed to and expressly "made a part of" its motion, as Exhibit F, a copy of an order by which it had directed its counsel to bring the present proceedings. In Paragraph (d) of Exhibit F the Commission states: "The testimony and evidence adduced at a certain hearing shows, among other things, that Peoples sells natural gas at its Pew compressor station in Clarion County, Pennsylvania, to New York State Natural Gas Corporation, an affiliated company, and that the latter immediately transports said natural gas into the State of New York where it sells the same to others for resale for ultimate public consumption * * *"

The sales thus described are sales in interstate commerce.6 Appellants urge that the Natural Gas Act does not give the Commission jurisdiction over all sales of natural gas in interstate commerce. But the Natural Gas Act does apply, among other things, to "the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use." That language exactly covers the sales described in Exhibit F. We cannot disregard the plain language of the statute because the Commission at one time interpreted it narrowly,7 or because the reports of Congressional committees show an intention not to "disturb" state regulation, or because appellants fear duplicate regulation. The Act applies to "natural-gas companies engaged in such * * * sale,"8 and defines "natural-gas company" as a company "engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale."9

Rule 10(c) of the Rules of Civil

Procedure, 28 U.S.C.A. following section 723c, provides that "A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." Counsel for appellants recognize that statements which the Commission makes in one of its other exhibits are, in effect, made in its motion,10 and appear to recognize that statements which appellants themselves make in their Exhibit 1 are, in effect, made in their answer. Yet counsel state that the Commission "made no allegation whatever in its motion" with respect to the Company's sales to the New York State Natural Gas Corporation. We do not know why counsel ignore the quoted portion of Paragraph (d) of the Commission's order. Rule 10(c) requires us to hold not merely that Exhibit F is "a part" of the motion, but that it is a part of the motion "for all purposes"; i. e., for every reasonably possible purpose. One such purpose was to show that the Commission had formally invoked the aid of the court; but another such purpose was to show, by setting forth jurisdictional facts, that it could legally invoke such aid. It follows that the statements which the Commission makes in Paragraph (d) of Exhibit F must be regarded as made in the motion. Perhaps counsel's view is that the Commission, by incorporating the order in the motion, did not then make, but merely asserted that it had made, the statements which the order contains. We think such a view would be too narrow. The question is not one of grammatical analysis. The question is whether the motion, in the light of Rule 10(c), fairly conveys the idea that the Commission reasserts in the motion the facts which it asserts in the order. "I said" often includes "I say," and a pleader's statement that he has previously found or asserted a fact may amount to a present assertion of the same fact. The Supreme Court, in an opinion by Mr. Justice Holmes, has applied this principle. It has held that a plea by the Secretary of the Interior that he did, on a previous occasion, determine a fact to be true, "affirms not merely the past but the present determination" of the Secretary.11

Appellants have nowhere denied the statements in Paragraph (d) of Exhibit F. Their answer to the Commission's motion denies that the Company is a natural-gas company within the meaning of the Natural Gas Act, and states that it "does not transport natural gas in interstate commerce or sell natural gas in interstate commerce for resale for ultimate public consumption for domestic, commercial, industrial, or any other use." But these denials are in the nature of legal conclusions, since they turn, or may turn, on the meaning of the legal terms "natural-gas company" and "interstate commerce." They cannot be deemed denials of the statements of fact in Exhibit F. Rule 8(d) of the Rules of Civil Procedure provides that "Averments in a pleading to which a responsive pleading is required, other than those as to the amount of damage, are admitted when not denied in the responsive pleading." It follows that appellants must be taken to have admitted the truth of the Commission's statements of fact in Paragraph (d) of Exhibit F. Since we are required to construe the pleadings so as to do substantial justice,12 it is pertinent to observe that appellants have at no time challenged the statements in question, or suggested that they would have challenged them if they had conceived them to be presently asserted in the motion. On the contrary; in Exhibit 1 attached to their answer, they set forth facts which are entirely consistent with, and nearly cover, these statements. During oral argument in the District Court counsel conceded that the Company often sells gas to the New York company, and impliedly conceded that this gas is sold for transportation to New York and resale. On this appeal counsel again concede that the Company sells to the New York company gas which it transports to New York. Appellants nowhere suggest that these sales are not "for resale for ultimate public consumption."

It follows from the quoted provisions of the Natural Gas Act that the Commission is authorized to investigate and determine whether the charges for the admitted sales described in Paragraph (d) of Exhibit F are reasonable.

Appellants do not deny, and must therefore be understood to admit, the Commission's allegation that the demanded books and records contain information regarding the cost of the Company's property, its expenses, and its revenues.13 This information is clearly pertinent to the question whether the charges referred to are reasonable. The Commission was therefore authorized to subpoena these books and records.

The Natural Gas Act provides that if the Commission's subpoena is not obeyed, the Commission may "invoke the aid" of a court, which may "issue an order requiring such person to appear before the Commission * * *, there to produce records, if so ordered."14 Upon appellants' refusal to comply with its subpoenas, the Commission invoked the aid of the District Court, which issued the appealed order.

Appellants' answer denied, and the Commission's motion did not in terms assert, that the Company is a natural-gas company subject to the Commission's jurisdiction. But, as we have shown, the motion asserted, and the answer did not deny, facts from which jurisdiction follows. The Commission's jurisdiction, like other legal conclusions, need not be expressly pleaded. Appellants complain that, although they demanded an opportunity to present evidence on "the jurisdictional facts," the District Court allowed only an oral argument and thereby denied them a full hearing. When...

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