United Gas Pipe Line Co. v. Tyler Gas Service Co., Civ. No. 2153.

• Decision Date: 19 May 1958
• Docket Number: Civ. No. 2153.
• Parties: UNITED GAS PIPE LINE COMPANY, Plaintiff, v. TYLER GAS SERVICE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Texas

162 F. Supp. 496

UNITED GAS PIPE LINE COMPANY, Plaintiff, v. TYLER GAS SERVICE COMPANY, Defendant.

Civ. No. 2153.

United States District Court E. D. Texas, Tyler Division.

May 19, 1958.

Vinson, Elkins, Weems & Searls, Thomas Fletcher, James W. McCartney, Jarrel D. McDaniel, Houston, Tex., for plaintiff.

Bryce Rea, Jr., Washington, D. C., Ramey, Calhoun, Brelsford, Hull & Flock, Thos. B. Ramey, Tyler, Tex., for defendant.

ESTES, District Judge.

This is the final engagement in the "ceaseless struggle" referred to by the Circuit Court of Appeals in its opinion in United Gas Pipe Line Company v. Tyler Gas Service Company, 5 Cir., 247 F.2d 681. Reference is made to that opinion, and to the opinion of the Court of Appeals, District of Columbia Circuit in Tyler Gas Service Company v. Federal Power Commission, 101 U.S.App.D.C. 184, 247 F.2d 590 for the background of the present controversy, which relates only to the matter of the amount of interest, if any, to which United is entitled. Defendant having refused to pay for gas sold it by plaintiff after February 1, 1956, at more than the contract rate, plaintiff, claiming a higher rate based on schedules filed with the Federal Power Commission, and having refused defendant's tenders of payment at the contract rate, filed this suit on October 16, 1956, "an ordinary run of the mill simple claim for money judgment", for the aggregate amount claimed by it to be due for gas furnished to the defendant to and including August, 1956, and such further sums as should become due thereafter up to the time of trial, with interest at 6 per cent. On motion of the defendant, pending procedure for review of the decision of the Federal Power Commission holding the filed and not the contract rates to be effective, trial of the instant suit was stayed by order dated March 5, 1957, by the late Honorable Lamar Cecil, District Judge of the Eastern District of Texas. Plaintiff moved to set aside this stay order, its objection to the stay being that it was left without any security for ultimate payment by defendant. The plaintiff's motion was denied, but the order denying it contained the following additional order, which I view as a condition, accepted by the defendant, of the refusal to set aside the stay:

"It is further Ordered that for the purpose of securing satisfaction of any judgment which may be rendered against the defendant in this cause, that within fifteen (15) days from this day defendant, deposit in escrow in the Peoples National Bank of Tyler, in cash or United States Government Securities the aggregate sum of $709,370.71, same being the amount of the billings for gas sold by plaintiff to defendant from February 1, 1956, through the month of January, 1957, and that defendant shall hereafter deposit in escrow in said Bank the amount of the monthly billings for gas sold by plaintiff to defendant within the specified payment period for such billings, and continue so to do until directed otherwise by the Court.

"It is further Ordered that all such cash deposited in escrow shall be promptly invested by said Bank in United States Government securities and said Bank shall collect the interest accruing on said securities and hold same together with said securities, subject to the further order of this Court."

Defendant complied with the order and made the deposits provided for in it covering gas furnished for the months of February, 1956, to October, 1957, inclusive, at the filed rates claimed by the plaintiff. The aggregate amount so deposited was $1,256,925.79. For that period the amount due at the contract rates was $624,821.50, the balance of $632,104.29 being the excess of the filed rates over the contract rates. The entire amount is still held by said bank in the form of money or securities, together with interest, which has been earned on the fund and which is alleged to have amounted to $29,540.63 up to December 15, 1957.

The proceedings for review of the Federal Power Commission's order upholding the scheduled rates terminated favorably to defendant (Tyler Gas Service Company v. Federal Power Commission, 101 U.S.App.D.C. 184, 247 F.2d 590, certiorari denied by the Supreme Court on December 9, 1957, 355 U.S. 895, 78 S.Ct. 263, 2 L.Ed.2d 193). There is no controversy but that plaintiff is entitled to $624,821.50 for the period from February, 1956, to October, 1957, inclusive. The controversy relates to its claim for interest, and particularly to the proper disposition of the interest earned by the fund in the hands of the bank.

The matter is brought up by plaintiff's motion filed February 12, 1958. Plaintiff's motion asserts that it is entitled to that proportion of the interest earned which the amount it is entitled to for gas at the contract rates bears to the total deposits; alleges that defendant denies this and claims to be entitled to all of the interest earned, and contends that if it be not entitled to any of the earned interest plaintiff is entitled to interest at 6 per cent from the due date of each monthly billing. Plaintiff's motion also alleges that both before and subsequent to the order of March 5, 1957, defendant had tendered to plaintiff a check each month representing the amount due at the contract rates, which tenders were refused because the rules of the Federal Power Commission required it to collect the filed rates. Plaintiff's motion also alleges that "(b) Defendant asserted that such tenders relieved it of the duty of paying obligatory interest upon the amount so tendered, (c) Plaintiff agreed with this position, understanding that so much of the moneys deposited in the bank account as equalled the moneys due at the contract rate were recognized to belong to plaintiff."

The quoted clauses do not amount to an allegation of an express agreement by defendant with plaintiff that a part of the amounts deposited and to be deposited should be the property of the plaintiff. Defendant in its reply relies upon its tenders themselves as relieving it from interest, and not upon any claimed agreement by plaintiff that such tenders were to be deemed sufficient to do so. Plaintiff did not accept the stay order, even with the condition annexed to it, but sought, unsuccessfully, by mandamus, to require the judge to proceed to trial. United Gas Pipe Line Company v. Tyler Gas Service Co., 5 Cir., 247 F.2d 681. There is no issue of fact here as to an agreement between the parties respecting the matters now in controversy.

Defendant's reply filed February 24, 1958, to plaintiff's motion filed February 12, 1958, is based upon the propositions (1) that by its tenders it was relieved of any obligation to pay "obligatory interest to plaintiff on the amount so tendered" and (2) that the deposits made in the bank and the securities into which they were converted at all times constituted the property of the defendant, having been deposited merely to provide security for the satisfaction of any judgment which might be obtained against it, and that therefore defendant as owner of the fund is entitled to all of the interest earned on it. It alleges that the amount due by it for gas at the contract rate for the period from February, 1956, to October, 1957, inclusive, has been recalculated by both parties and determined to be $624,821.50 instead of the slightly smaller amount stated in plaintiff's motion, and states that it tenders that amount in full payment and satisfaction.

Plaintiff's suit only involved amounts claimed to be due for gas furnished from February, 1956, to October, 1957, inclusive. However, prior to February 1, 1956, plaintiff had furnished gas for a number of years for which it had billed and had been paid at the filed rates, resulting in an excess payment of upwards of $350,000. Defendant's answer, filed February 15, 1958, includes a counterclaim for the amount of this excess. Plaintiff's motion admits the excess in the amount of $359,618.81; admits the obligation to pay interest at 6 per cent and alleges that it has tendered the above amount plus interest through February 6, 1958, the total being $423,647.46, which tender was refused by the defendant "for the stated purpose of checking the computations." This aggregate amount of principal and interest is stated by defendant in its reply to have been recalculated by the parties and agreed to be $423,314.69, which it admits was tendered by plaintiff to defendant. The reply asserts that "defendant is willing to accept such tender in satisfaction of the judgment which may be entered herein upon its aforesaid counter claim." Plaintiff's memorandum, in support of its motion, states that it tendered its check to defendant on February 7, 1958, for this item. The tender appears to have been unconditional, and it stopped the running of interest on this item as of the date of the tender.

Plaintiff's motion proposes that the case be disposed of...