The City of Hutchinson v. The Hutchinson Gas Company

• Decision Date: 11 February 1928
• Docket Number: 27,966
• Citation: 264 P. 68,125 Kan. 346
• Parties: THE CITY OF HUTCHINSON, Appellee, v. THE HUTCHINSON GAS COMPANY, Appellant
• Court: Kansas Supreme Court

264 P. 68

125 Kan. 346

THE CITY OF HUTCHINSON, Appellee, v. THE HUTCHINSON GAS COMPANY, Appellant

No. 27,966

Supreme Court of Kansas

February 11, 1928

Decided January, 1928

Appeal from Reno district court; WILLIAM G. FAIRCHILD, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. GAS--Rates and Charges--Authority of Company After Prescribed Rates Declared Confiscatory. Rule followed that where a court having jurisdiction determines that a schedule of rates prescribed by official authority for the services of a utility company is noncompensatory and confiscatory, the utility company may prescribe and collect rates of its own making until new rates have been established by official authority.

2. SAME--Rates and Charges--Jurisdiction of Courts to Enjoin Noncompensatory or Excessive Rates. While the courts of this state have no rate-making powers, they may on proper occasion enjoin noncompensatory rates prescribed by the public service commission or other official authority, and may also on proper occasion enjoin excessive rates promulgated by a utility company when its right to make its own rates arises as a consequence of the officially prescribed rates being adjudged invalid.

3. SAME--Rates and Charges--Enjoining Excessive Rates. Whenever as a temporary consequence of litigation or adjudication utilities rates prescribed by public authority are held invalid and the utility company is thereby privileged to impose and exact rates of its own making, such self-prescribed rates must be reasonable, and unjust or excessive ad interim rates prescribed by the utility company may be enjoined in ancillary proceedings in the court whose prior orders made it possible for the utility company to establish temporary rates of its own making.

4. SAME--Rates and Charges--Enjoining Excessive Rate--Jurisdiction of Court. When a gas rate prescribed by the public service commission has been set aside as noncompensatory by a court of competent jurisdiction the utility company may prescribe and collect reasonable rates of its own making until other lawful rates are promulgated by official authority, and the ad interim rates prescribed by the utility company cannot be summarily enjoined by another district court in independent proceedings, although by proper ancillary proceedings the court which enjoined the officially prescribed rates as being too low may similarly enjoin the ad interim rates prescribed by the utility company if they are shown to be excessively high.

5. COURTS--Conflicting Jurisdiction--Priority and Retention of Jurisdiction. Under the circumstances stated in the opinion the ad interim gas rates imposed by defendant on its patrons in the city of Hutchinson were not justiciable in the district court of Reno county, and could only be questioned in the court whose prior orders had made it possible for the gas company temporarily to exact rates of its own making.

A. C Malloy, R. C. Davis, Warren H. White, all of Hutchinson, F. S. Jackson, of Topeka, and Robert D. Garver, of Kansas City, Mo., for the appellant.

Max Wyman and Walter F. Jones, both of Hutchinson, for the appellee.

OPINION

DAWSON, J.:

This is an appeal from a judgment of the district court of Reno county, wherein the defendant, the Hutchinson Gas Company, was enjoined from putting into effect a schedule of rates for gas for domestic consumption in Hutchinson pending a final determination of litigation over the gas rates prescribed by the public service commission.

It appears that for some years prior to November 14, 1925, the domestic rate for gas in the city of Hutchinson was 60 cents per thousand cubic feet, plus a service charge of 75 cents. On November 14, 1925, the city of Hutchinson filed a complaint before the public service commission alleging that these gas and service charges exacted from the resident consumers of Hutchinson were "exorbitant, unreasonable, unjust, oppressive, arbitrary, capricious and unnecessary." While that complaint was pending and undetermined, on February 12, 1926, the Hutchinson Gas Company filed with the public service commission a new schedule of gas and service rates for Hutchinson and sought official approval thereof. Pursuant to a hearing on the city's complaint against the existing rates and on the gas company's application for approval of its proposed new schedule of rates, the commission, on April 8, 1926, made an order, to be effective September 1, 1926, prescribing certain graduated rates in Hutchinson and vicinity.

Discontented with this order, the Hutchinson Gas Company instituted an action in the district court of Shawnee county to enjoin its enforcement on the alleged ground that the prescribed rates were noncompensatory and confiscatory. Concurrent therewith were certain other proceedings before the commission concerning the gas rates and service charges in the cities of Newton and Wichita, which likewise culminated in litigation before the district court of Shawnee county. On issues joined involving the gas rates and service charges in all three of these cities, that court appointed a referee, who heard the evidence adduced by the parties and made comprehensive findings of fact and conclusions of law, which with slight changes were adopted by the district court. The rates prescribed by the public service commission were enjoined as confiscatory, as likewise were the prior rates under which the gas company had been operating since August 17, 1920, under a previous order of the commission.

This judgment of the district court of Shawnee county is the subject matter of three appeals to this court, Hutchinson Gas Co. v. Public Service Commission, No. 27,945, and two companion cases, Nos. 27,944 and 27,946, which were argued and submitted at our January sitting, at which time also the instant case was presented. It has been necessary to a correct understanding of the present case to include in the foregoing statement a brief survey of this collateral litigation.

After the Shawnee county district court rendered its decision holding invalid the rates prescribed by the public service commission, the Hutchinson Gas Company filed with the commission and promulgated a new schedule of rates, viz.:

"ANNOUNCEMENT.

[Effective July 1, 1927.]

"Pending final determination of present rate litigation the following domestic rates are announced for Wichita, Hutchinson and Newton, and future deliveries will be based thereon:

"20c. per 100 cubic feet for the first 500 cubic feet per month.

"15c. per 100 cubic feet for the next 1,500 cubic feet per month.

"6c. per 100 cubic feet for the next 5,000 cubic feet per month.

"Minimum monthly bill, $ 1.

"Penalty of 5 per cent added to all bills not paid within 15 days after date of billing.

"This schedule will continue in effect substantially the present cost of house heating, and our gas supply having been increased all customers may avail themselves of the service for the coming winter.

"THE HUTCHINSON GAS COMPANY."

Following this announcement, on July 14, 1927, the city of Hutchinson filed this action in the district court of Reno county to enjoin the Hutchinson Gas Company from putting these self-prescribed rates into effect. The petition briefly narrated the antecedent litigation in the district court of Shawnee county, and alleged that the new rates were "illegal, unauthorized and unlawful," that plaintiff was without an adequate remedy at law, and that--

"Plaintiff alleges that the Hutchinson Gas Company is a public utility operated wholly within the city of Hutchinson, and it is operated principally for the benefit of said city and its people; and that by reason thereof the City of Hutchinson has exclusive original jurisdiction in the matter of fixing rates to be charged and charges to be demanded, exacted or received by the Hutchinson Gas Company for natural gas furnished to the city of Hutchinson and its people."

Four days later a hearing was had on the city's application for a temporary injunction. The gas company moved to dismiss for want of jurisdiction and because of the pendency in the supreme court of the appeal from the judgment of the district court of Shawnee county. The motion was overruled; evidence was briefly presented on plaintiff's behalf; the trial court found the facts as alleged in plaintiff's petition, and the defendant gas company was restrained from putting the new rates in effect.

Hence this appeal.

Owing to the importance of the subject it seems advisable, even at the risk of repeating what this court has already said, to consider at some length the matters presented in this appeal.

We have set out above a literal quotation from plaintiff's petition in which it is alleged that the defendant gas company is a utility operated wholly within the city of Hutchinson and principally for the benefit of that city and its people, and that--

"The city of Hutchinson has exclusive original jurisdiction in the matter of fixing rates to be charged and charges to be demanded, exacted or received by the Hutchinson Gas Company for natural gas furnished to the city of Hutchinson and its people."

Now, it does not appear that this allegation received any consideration in the trial court; it is not discussed in the briefs of counsel, and it is very doubtful if it has any merit (City of Winfield v. Court of Industrial Relations, 111 Kan. 580, 207 P. 813, syl. P 3, 207 P. 813), but it will serve as a starting point for a discussion of the pertinent law of this case.

The public utilities act provides:

". . . The power and authority to control and regulate all public utilities and common carriers situated and operated wholly or principally within any city or principally operated for the benefit of...