Potash Co. of America v. New Mexico Public Service Commission

• Decision Date: 10 September 1956
• Docket Number: No. 6015,6015
• Parties: POTASH COMPANY OF AMERICA, Plaintiff-Appellant. v. NEW MEXICO PUBLIC SERVICE COMMISSION and Southern Union Gas Company, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 908

303 P.2d 908

62 N.M. 1

POTASH COMPANY OF AMERICA, Plaintiff-Appellant. v. NEW MEXICO PUBLIC SERVICE COMMISSION and Southern Union Gas Company, Defendants-Appellees.

No. 6015.

Supreme Court of New Mexico.

Sept. 10, 1956.

Rehearing Denied Dec. 10, 1956.

Gilbert, White & Gilbert, Santa Fe, Lewis, Grant & Davis, Denver, Colo., Roy H. Blackman, Jr., Carlsbad, for appellant.

Richard H. Robinson, Atty. Gen., Alfred P. Whittaker, James B. Cooney, Sp. Asst. Atty. Gen., for New Mexico Public Service Commission.

Manuel A. Sanchez, Santa Fe, Atwood & Malone, Roswell, Willis L. Lea, Jr., Dallas, Tex., for Southern Union Gas Co.

SADLER, Justice.

The question for decision, prior to hearing this appeal on its merits, is whether the plaintiff below, the appellant here, should be denied the hearing in this proceeding now sought, by reason of its failure to exhaust the statutory remedy provided by the New Mexico Public Utility Act, 1953 Comp., c. 68, Art. 9, Secs. 68-9-1 to 68-9-7, for reviewing orders of New Mexico Public Service Commission.

The appeal is from a judgment of the district court of Santa Fe County dismissing the amended complaint of Potash Company of America, as plaintiff, against the New Mexico Public Service Commission and Southern Union Gas Company, the parties joined as defendants in the amended complaint filed in the district court of Santa Fe County May 19, 1954. The parties to the appeal will be referred to hereinafter as follows: The appellant, who was plaintiff below, as the 'Potash Company,' or 'plaintiff,' and the defendants either by that name or as the 'Commission' and 'Southern Union,' all as best serves clarification in each instance.

The controversy out of which the appeal arises originated in certain action taken by the Commission on the ex parte application of Southern Union putting into effect an interim rate change ordered by the Commission. The amended complaint not only sought to enjoin the Commission from enforcing the new rate but, as well, to recover from Southern Union excessive payments said to have been made for gas supplied under the new rate.

According to allegations of the amended complaint on or about April 30, 1948, the Potash Company and Southern Union entered into a modification of an existing contract under which the rate for gas furnished to former by the latter should be approximately 9 cents per MCF and obligating the plaintiff to take and pay for certain specified minimum quantities of gas. The modified contract also provided that it and said rate should be in full force and effect until April 30, 1956, but that in latter year the rate should be adjusted to reflect increases in cost to Southern Union; and providing, further, that it could not be altered by either party without written consent of the other. In due season and on October 11, 1948, the Commission entered its Order No. 96, whose effect was to authorize Southern Union to enter into such contract and to continue to charge plaintiff the rates therein specified until further order of the Commission.

So matters stood, says the amended complaint, when on or about December 18, 1948, Southern Union for the first time approached Potash Company requesting modification of the contract of 1948, representing that it anticipated an increase in the cost of gas to an extent making it desirable to amend the existing contract by raising the rate charged plaintiff; that again about October 8, 1953, Southern Union conferred with plaintiff on the subject of negotiating an increase in rates to be charged for gas based on substantial increases required to be paid by Southern Union to El Paso Natural Gas Company.

The amended complaint went on to say that while these negotiations were still pending, no settlement of Southern Union's request having been reached between the parties, Southern Union, nevertheless, on February 16, 1954, without any notice to the plaintiff, filed with the Commission a purported increase in rates for gas furnished plaintiff accompanied by a petition requesting that the increase indicated be made effective immediately. This filing was rejected by the Commission on February 17, 1954. On the same day, however, a second filing with the Commission was made announcing an increase in the contract rate from approximately 9 cents per MCF to approximately 17 cents per MCF, to be effective until the Commission could hold a hearing to determine and set a new and proper rate. The interim rate as thus increased was to be effective February 20, 1954. This filing, like the first one, was without notice to plaintiff.

Thereupon, and on February, 17, 1954, as the amended complaint goes on to allege in paragraphs 11 and 12, thereof:

'11. On February 17, 1954, the Commission, apparently relying upon the ex parte statements of Southern Union in its petition and upon other matters as stated in its order, without notice or formal hearing or any hearing at which the plaintiff was present, entered an interlocutory Order purporting to make the rate increase requested by Southern Union Effective as of February 20, 1954. A copy of said order of the Commission is annexed to the Complaint as Exhibit F.

'12. On or about March 8, 1954, the plaintiff moved the Commission to dismiss and vacate its order of February 17, 1954, for lack of jurisdiction. Copy of such motion is annexed to the Complaint as Exhibit G. The Commission heard argument of counsel for the plaintiff and Southern Union on said motion on or about March 18, 1954. On or about March 25, 1954, the Commission denied the plaintiff's motion to dismiss, and refused to modify its order of February 17, 1954, and continued to take the position that the rate increase was effective as of February 20, 1954.'

Actually, the amended complaint contained three claims. The first two were directed against Southern Union alone and were alternative claims to recover the amounts paid by the plaintiff to the utility for gas service for the period commencing February 21 and ending March 20, 1954, by virtue of the tariff rate in effect under the provisions of the Interlocutory Order and Notice of Hearing in Case No. 418 before the Commission which were over and above the rate formerly in effect for the gas service provided to the plaintiff by the utility.

The third claim was directed against both the Commission and Southern Union. It asserted that the action was instituted under the provisions of Section 74 of the Public Utility Act of New Mexico, Sec. 68-10-2, 1953 Comp. Paragraphs 1, part of 10, 11, 12, 13, 14, 16, 17 and 18 were substantially identical to the allegations contained in the original complaint. The prayer sought declaratory judgment relief and injunctive relief. The Commission filed a Motion to Strike the allegations contained in paragraphs 2 through 9, part of paragraph 10 and paragraph 15 and its Motion to Dismiss the Third Claim. Southern Union filed its Motion to Dismiss the first and second claims asserted against it, its Motion to Strike the allegations sought to be stricken by the Commission and its Motion to Dismiss the Third Claim. On August 5, 1954, the motions were argued before the court. Thereafter briefs were submitted by the parties, the plaintiff submitting its brief on August 23, 1955, the defendants submitting a joint brief on October 13, 1955, and the plaintiff submitting its reply brief thereafter.

On June 29, 1955, the district court entered its Order. The Order dismissed the first and second claims without prejudice. The Order dismissed the third claim against both defendants, without prejudice, on the grounds that the plaintiff had not exhausted its administrative remedy. The appeal herein is made from the Order so entered.

The matter of what was a just and reasonable rate proceeded before the Commission notwithstanding the filing by Potash Company of the action out of which this appeal arises in the district court of Santa Fe County on April 5, 1954, as hereinabove stated. Following the steps taken before the Commission in the matter, already mentioned above, and due notice to the parties herein, the Potash Company filed a motion asking the Commission to join as parties all consumers of gas from Southern Union, which motion was denied. The Potash Company next moved for a continuance which the Commission likewise denied. Thereupon, in due course, the hearings began consisting of three sessions, the first convening on May 28, 1954, and continuing for three days; the second was commenced June 28, 1954, and continued for five days; the third began August 23, 1954, lasted thirteen days, and concluded on September 9, 1954.

On January 26, 1955, in case No. 418, the docket number borne by this proceeding, the Commission entered its final order fixing a new rate at approximately 17cents per MCF of gas, effective from February 20, 1954 (the effective date of the Commission's earlier order). The Potash Company filed its application for rehearing as provided by the Public Utility Act which was denied on March 16, 1955. Thereafter, on April 15, 1955, there was filed in the district court of Eddy County, New Mexico, a petition by Potash Company seeking the statutory review of the final Order of the Commission entered January 26, 1955, and of the Order denying application for rehearing entered March 16, 1955. Pursuant to the requirements of the Public Utility Act the Commission certified to the district court of Eddy County the record of all the testimony taken before the Commission in the matter and a transcript of all proceedings therein, which petition for review together with the record thereof is now pending, undisposed of, before the district court of Eddy County as cause No. 15,107 on the civil docket of said court.

We should state at this point that the Commision early in the proceedings before it entered an order requiring Southern Union to give a bond guaranteeing the refund of any money that might have been collected by it from...