State v. Lone Star Gas Co.

• Citation: 129 S.W.2d 1164
• Decision Date: 12 April 1939
• Docket Number: No. 8238.,8238.
• Parties: STATE et al. v. LONE STAR GAS CO.
• Court: Court of Appeals of Texas

129 S.W.2d 1164

STATE et al. v. LONE STAR GAS CO.

No. 8238.

Court of Civil Appeals of Texas. Austin.

April 12, 1939.

Rehearing Denied June 7, 1939.

Memorandum on Rehearing June 14, 1939.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Travis County; C. A. Wheeler, Judge.

Action by the State of Texas and others against the Lone Star Gas Company to enforce an order of the Texas Railroad Commission prescribing the rate for domestic gas delivered by the defendant to its allied distributing companies. The trial court declared the rate order invalid and restrained its enforcement, and the State of Texas and others appeal.

Judgment reversed, injunction dissolved, and rate declared valid.

James V. Allred, Atty. Gen., and Wm. C. Fitzhugh, Elbert Hooper, and A. R. Stout, Asst. Attys. Gen., for appellants State of Texas and Railroad Commission at the time the case was first submitted and argued.

Wm. McCraw, Atty. Gen., Alfred M. Scott and Scott Gaines, Asst. Attys. Gen., A. R. Stout (former Asst. Atty. Gen.), of Houston, F. L. Kuykendall, of Austin, and Edw. H. Lange, of Washington, D. C., for appellants while the case was in this court following Allred's administration.

Gerald C. Mann, Atty. Gen., and Hugh Q. Buck, Asst. Atty. Gen., for appellants at this time (they being successors of Wm. McCraw administration).

Ben H. Powell, Judge, of Austin, Marshall Newcomb, of Dallas, Thompson & Barwise, and Ogden K. Shannon Jr., all of Fort Worth, Roy C. Coffee, of Dallas, and Black, Graves & Stayton and Chas. L. Black, all of Austin, for appellee.

BLAIR, Justice.

In the instant case this Court sustained the validity of an order of the Railroad Commission prescribing a 32-cent per thousand cubic feet city gate rate for domestic gas delivered by Lone Star Gas Company to its several allied distributing companies at the city gates of some 270 cities and towns in Texas, reversing the judgment of the District Court which declared the rate order to be invalid. See State of Texas et al. v. Lone Star Gas Company, Tex.Civ.App., 86 S.W.2d 484, 506. The Supreme Court of the United States reversed the judgment of this Court upon one ground (Lone Star Gas Company v. State of Texas et al., 304 U.S. 224, 58 S. Ct. 883, 891, 82 L.Ed. 1304), as follows:

"The Court of Civil Appeals reversed the judgment upon a distinct ground. That was that appellant had not sustained its burden of proof because it had failed to make `a proper segregation of interstate and intrastate properties and business.' Thus, the necessity for that segregation was made the criterion. That is clearly shown both from the Court's main opinion and its opinion upon rehearing from which we have quoted. * * *

"We think that this ruling as to the necessity of segregation, and that the sufficiency of appellant's evidence should be determined by that criterion, was erroneous. This was not a case where the segregation of properties and business was essential in order to confine the exercise of state power to its own proper province. * * * The effort at segregation came after voluminous testimony had been taken which fully presented appellant's case with respect to the value of its property and the result of its operations as an integrated system and the bearing of this evidence upon the contested rate. This proof could not be ignored because of a futile attempt, in response to the State's pressure, to find an alternative ground to support the attack upon the Commission's order."

The cause was remanded to this Court "for further proceedings not inconsistent with the opinion of the Supreme Court." After receipt by this Court of the mandate of the Supreme Court, there arose a controversy as to what "further proceedings" should be had in the case and what judgment should be rendered thereon "not inconsistent with the opinion of the Supreme Court."

The Commission contends that since the Supreme Court reversed this Court's judgment solely upon its "untenable" ruling as to the necessity of the Gas Company's making a proper segregation of its interstate and intrastate property and business, and remanded the cause "for further proceedings not inconsistent with the opinion of the Supreme Court," this Court is required to review the "over-all" or unsegregated basis and evidence, which means the evidence relating to the Gas Company's entire integrated operating system in both Texas and Oklahoma as considered by the Commission in prescribing the rate order, and render whatever judgment is proper; and either to reverse the judgment of the District Court and render judgment sustaining the rate order as this Court did before; or to reverse the judgment of the District Court on account of the several errors of practice complained of and remand the cause for another trial on the merits, according as such over-all evidence and law and justice may require; and that either course would be entirely consistent with the opinion of the Supreme Court.

The Gas Company contends that in the "further proceedings" carrying out the mandate of the Supreme Court, this Court can not review, weigh, nor consider the so-called over-all evidence and make findings thereon, and then render any judgment such findings may require, and especially the same judgment that has already been reviewed and reversed by the Supreme Court; that the Supreme Court "reversed the judgment of this Court, not because this Court failed to make findings on the over-all evidence, but because this Court set aside the findings made by the `trier of facts' in the District Court by applying to the over-all evidence sustaining such findings, an improper test or standard to determine its sufficiency"; and that the only judgment this Court may now render is to affirm the judgment of the District Court.

The contention now made by the Gas Company that this Court held the over-all evidence insufficient to sustain the judgment of the District Court is directly opposed to the position taken by it before the Supreme Court. There the Gas Company contended that this Court had not given any consideration, weight, nor effect whatever to the over-all evidence, but had totally disregarded same, and had based its judgment solely upon its ruling as to the necessity of the Gas Company's making a proper segregation of its interstate and intrastate property and business. So well did the Gas Company argue its point that the Supreme Court adopted that view and expressly reversed the judgment of this Court upon that sole ground.

Whether this Court considered the over-all evidence sufficient to sustain the rate order as a matter of law, or considered the Gas Company's over-all evidence not sufficiently "clear and satisfactory" to sustain the District Court's judgment declaring the rate order invalid, is not material, in view of the decision of the Supreme Court that this Court did not consider the over-all evidence. That is, if this Court did so hold, such holding is now immaterial, because the Gas Company insisted and the Supreme Court held that this Court did not give any consideration, weight, nor effect whatever to the over-all evidence, but had based its judgment solely upon the "untenable" ruling as to necessity of the Gas Company's making a segregation of its interstate and intrastate property and business; and upon "an alternative ground", and "by the application of an untenable test or standard of proof," relating only to "an alternative ground to support the attack upon the Commission's order." In view of these findings and conclusions, this Court is necessarily left free, and the Supreme Court so intended, to review the entire evidence bearing upon the over-all or unsegregated property and business of the Gas Company; and upon such review either to reverse the judgment of the District Court and render judgment sustaining the validity of the rate order as this Court did before; or to reverse the judgment of the District Court and remand the cause for another trial on account of the several errors of practice which were not discussed before; or to affirm the judgment of the District Court, according as the over-all evidence and law and justice may require.

The Supreme Court also held that the Commission based its rate order and the District Court its judgment upon the evidence relating to the over-all or unsegregated basis; and that the "first and primary ground" to be determined was whether the rate was unreasonable, unjust, and confiscatory because not supported by the over-all evidence; but that this Court decided the case solely upon the alternative and improper segregated basis. The Supreme Court did not itself determine such first and primary ground; and if this Court did not, then no reason exists why it should not now do so.

The Supreme Court further held that the "first and primary ground remained and the determination of the court of first instance as the trier of facts that the Commission's rate was confiscatory could not properly be set aside by the application of an untenable standard of proof [necessity of segregation] and in disregard of the evidence which had been * * * properly submitted to the jury." The Supreme Court approved the form of a special issue submitting the question of whether the rate was "unreasonable and unjust" as substantially submitting the issue of "whether the rate was confiscatory"; and then applied the rule applicable to ordinary law suits as between individuals, to the effect that this Court could not set aside a jury finding upon conflicting evidence, and citing the cases of Post v. State, 106 Tex. 500, 171 S.W. 707, and United Gas Pub. Service Co. v. Texas, 303 U.S. 123, 58 S.Ct. 483, 82 L.Ed. 702. However, the Supreme Court specifically held that "the state is entitled to determine the procedure of its courts, so long as it provides the requisite due process"; and further held, "that a state may modify trial by jury or abolish it altogether." Our courts have...