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

McGHEE, J., dissenting.

McGHEE, Justice

(dissenting).

' I am unable to agree with the majority opinion.

■ Section 74 of our Public Utility Act, § 68-10-2, N.M.S.A.1953 gives the right of immediate action in court when the Commission or its members undertake to act in excess of its jurisdiction and authority conferred by the act, or without jurisdiction, so our decisions under other administrative acts which do not have such a provision, that an aggrieved party must await his administrative remedies, do not, in my opinion, apply in this case.- Furthermore, State Corporation Comm. v. Mountain States Tel. & Tel. Co., 1954, 58 N.M. 260, 270 P.2d 685, relied upon by the majority, involved a constitutional provision which bears no similarity whatever to the provisions of the Public Utility Act.

We said in the case of In re Field’s Estate, 1936, 40 N.M. 423, 60 P.2d 945, 947:

“There are three jurisdictional essentials necessary to the validity of every judgment, to wit, jurisdiction of parties, jurisdiction of the subject matter, and power or authority to decide the particular matters presented, Protest of Gulf Pipe Line Co., 168 Okl. 136, 32 P.2d 42; Windsor v. McVeigh, 93 U.S. 274, 23 L.Ed. 914, and the lack of either is fatal to the judgment, Reynolds v. Stockton, 140 U.S. 254, 11 S.Ct. 773, 35 L.Ed. 464.”

The following authorities describe the meaning of “excess of jurisdiction”:

“Court may have jurisdiction of subject matter and party, but its acts and order may nevertheless be in excess of its jurisdiction, as being something which it has no power to do, and in that manner any act of the court in violation of statutory requirements may be considered to be in ‘excess of jurisdiction’.” 15A Words and Phrases, Pocket Part, digesting State ex rel. Smilack v. Bushong, 1952, 93 Ohio App. 201, 112 N.E.2d 675, 681.
“ ‘Excess of jurisdiction, ds distinguished from the entire absence of jurisdiction, means that the act, although within the general power of the judge, is not authorized and therefore void, with respect to the particular case, because the conditions which alone authorize the exercise of his general power in that particular case are wanting, and hence, the judicial power is not in fact lawfully invoked.’ 15 C.J. p. 729, par. 24.” In re Martin’s Estate, 1939, 31 Cal.App.2d 680, 88 P.2d 755, 757.
“ ‘ * * * Weintraub v. Superior Court, 91 Cal.App. 763, 267 P. 733 quotes with approval from Broom v. Douglass, 175 Ala. 268, 57 So. 860, 44 L.R.A.,N.S., 164, Ann.Cas.1914C, 1155, as follows: “‘By “excess of jurisdiction,” as distinguished from the entire absence of jurisdiction, we understand and mean that the act, though within the general power of the judge, is not authorized, and therefore void, with respect to the particular case because the conditions which alone authorize the exercise of his general power in that particular case are wanting; and hence the judicial power is not in. fact lawfully invoked.’ ” ’ ” In re Knox’ Estate, 1942, 52 Cal.App.2d 338, 126 P.2d 108, 112.

Did the Commission exceed its authority in its ex parte change of the contract rate to 17‡ per thousand feet of gas to be immediately effective-and to continue until it had "the hearing which it subsequently held? I believe it did for the reasons to be now stated. •• ’ ' v ,-

The sections of the utility act governing rate changes are §§ 39, 43 and 50, § 68-6-3, § 68-6-7, and § 68-8-1, N.M.S.A.1953, which read:

Section 39: “Under such rules and regulations as the commission may prescribe, every public utility subject to the jurisdiction of the commission, shall file with the commission, within such time and in such form as the commission may designate, schedules showing all rates established by it and collected or enforced, or to be collected or enforced, within the jurisdiction of the commission. The utility shall keep a copy of such schedules open to public inspection under such rules and regulations as the commission may prescribe.”
Section 43: “Unless the commission otherwise orders, no public utility shall make any change in any rate which has been duly established except after thirty (30) days’ notice to the commission, which notice shall plainly state the changes proposed to be made in the rates then in force, and the time when the changed rates will go into effect. The utility shall also give such notice of the proposed changes to other interested persons as the commission in its discretion may direct. All proposed changes shall be shown by filing new schedules, or shall be plainly indicated upon schedules filed and in force at the time and kept open to public inspection. The commission, for good cause shown, may allow changes in rates, without requiring the thirty (30) days? notice, under such conditions as it may prescribe. All such changes shall be immediately indicated upon its schedules by such public utility.
“Whenever there is filed with the commission by any public utility any schedule proposing a new rate or rates, commission may, either upon complaint ,or upon its own initiative, upon reasonable notice, enter upon a hearing concerning the lawfulness of such rate or rates; and pending such hearing and the decision thereon the commission, upon filing with such schedule and delivering to the utility affected thereby a statement in writing of its reasons therefor, may at any time before they become effective, suspend the operation of such rate or rates, but not for a longer period than ninety (90) days beyond the time when such rate or rates would otherwise go into effect unless the commission shall find that a longer time will be required, in which case the commission may extend the period for not to exceed six (6) months; Provided, and notwithstanding any such order of suspension, the public utility may put such suspended rate or rates into effect on the date when it or they would have become effective, if not so suspended, by filing with the commission a bond in a reasonable amount approved by the commission, with sureties approved by the commission, to the persons entitled thereto the amount of the excess, if the rate or rates so put into effect are finally determined to be excessive; or there may be substituted for such bond, other arrangements satisfactory to the commission for the protection of the parties interested. If the public utility fails to make refund within thirty (30) days after such final determination any person entitled to such refund may sue therefor in any court of this state of competent jurisdiction and be entitled to recover, in addition to the amount of the refund due, all court costs, but no suit may be maintained for that purpose unless instituted within one (1) year after such final determination. Any number of persons entitled to such refund may join as plaintiffs and recover their several claims in a single action; in which action the court shall render a judgment severally for each plaintiff as his interest may appear. During any such period of suspension the commission may, in its discretion,' require that the public utility involved shall furnish to its consumers or patrons a certificate or other evidence of payments made by them .under the rate or rates which the public utility has put into operation in excess of the rate or rates in effect immediately prior thereto.
“If, after such hearing, the commission finds any such proposed rate or rates to be unjust, unreasonable, or in anywise in violation of law, the commission shall determine the just and reasonable rate or rates to be charged or applied by the utility for the service in question, and shall fix the same by order to be served upon the utility; and such rate or rates are thereafter to be observed until changed, as provided by this act (68-3-1 to 68-11-5).”
Section 50: “Upon a complaint made and filed by any municipality, or by any person or party affected, that any rate, service regulation, classification, practice, or service in effect or proposed to be made effective is in any respect unfair, unreasonable, unjust, or inadequate, the commission may proceed, if the commission finds probable cause for said complaint, and without such complaint, the commission, whenever it deems that the public interest' or the interest of consumers and investors so requires, may proceed, to hold such hearing as it may deem necessary or appropriate ; but no such hearing shall be had without notice, and no order affecting such rates, service regulations, classifications, practice, or service complained of shall be entered by the commission without a hearing and notice thereof. Any utility may make complaint as to any matter within the provisions of this act (68-3-1 to 68-11-5) affecting it.”

The Natural Gas Act, 52 Stat. 821, 15 U.S.C.A. § 717 et seq. and Title II of the Federal Power Act, 49 Stat. 847, 16 U.S. C.A. § 824 et seq. substantially parallel our Public Utility Act insofar as provisions for changing rates are concerned. In fact, the Commission in its answer brief makes the following appraisal:

“Section 43 of the Public Utility Act, prescribes the ‘rate filing’ procedure. Its counterpart, substantially to the same effect, is found in many of the regulatory acts adopted by about 36 of the states, and also the Federal Natural Gas Act, sections 4(d) and 4(e), the Federal Power Act, section 205(d) and (e), and the Interstate Commerce Act, sections 6(3) and 15(7) [49 U.S. C.A. §§ 6(3), 15(7)].”

There is, as the majority opinion states, a division among the state courts as to whether a public utility may change a contract rate by following the rate-filing procedure and securing the approval of the commission, or by the commission letting it go into effect by failure to order a stay pending a hearing.

The United States Supreme Court has recently construed the rate-making sections of the Natural Gas and Federal Power Acts in the companion cases of United Gas Pipe Line Co. v. Mobile Gas Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373 and Federal Power Comm. v. Sierra P. P. Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388.

Before beginning discussion of these cases, it might be well to note the Natural Gas Act contains a provision for private rate contracts but requires them to be filed with the commission, § 4(c), while our statute refers to them in only one section, Section 27, § 68-5-15, N.M.S.A.1953, where it states private rate contracts may be made between municipalities and public utility companies. There are many of these contracts in New Mexico and they have long been recognized by our Public Service Commission. By one of its rules all such contracts between private users and utilities are required to be filed with the Commission and it has been its practice to approve them. Certainly there is nothing in our act declaring them illegal.

The question presented for decision in the Mobile case, supra, was stated to be whether under the Natural Gas Act a regulated natural gas company furnishing gas to a distributing company under a long-term contract could, without the consent of the distributing company, change the rate specified in the contract simply by filing a new rate schedule with the Federal Power Commission.

In the course of the Mobile opinion it is said [350 U.S. 332, 76 S.Ct. 378]:

“The provision of the Natural Gas Act directly in issue here is § 4(d), which provides that ‘no change shall be made by any natural-gas company in any such (filed) rate * * * or contract * * * except after thirty days’ notice to the Commission’, which notice is to be given by filing new schedules showing the changes and the time they are to go into effect. It is argued that this provision authorizes a natural gas company to change its rate contracts simply by filing a new schedule of rates, to go into effect in no less than thirty days. On its face, however, § 4(d) is simply a prohibition, not a grant of power. It does not purport to say what is effective to change a contract, any more than § 4(c) purports to define what constitutes a 'contract’ that may be filed with the Commission. The section says only that a change cannot be made without the proper notice to the Commission; it does not say under what circumstances a change can be made. Absent the Act, a unilateral announcement of a change to a contract would of course be a nullity, and we find no basis in the language of § 4(d) for inferring that the mere imposition of a filing-and-notice requirement was intended to make effective action which would otherwise be of no effect at all. In short, § 4(d) on its face indicates no more than that otherwise valid changes cannot be put-into effect without giving the required notice to the Commission. To find in the section a further purpose to empower natural gas companies to change-their contracts unilaterally requires reading into it language that is neither there nor reasonably to be implied.”

The court held where the rate-filing section was followed, the commission could only deny the rate where it was found to be unreasonable following a hearing, and that any change in contract rates could only be made under the provisions of section 5(a), (the same as our section 50, set out supra) and after a hearing, saying':

“The powers of the Commission are defined by §§ 4(e) and 5(a). The basic power of the Commission is that given it by § 5(a) to set aside and modify any rate or contract which it determines, after hearing, to be ‘unjust, unreasonable, unduly discriminatory, or preferential’. This is neither a ‘rate-making’ nor a. ‘rate-changing’ procedure. It is simply the power to review rates and contracts made in the first instance by natural gas companies and, if they are determined to be unlawful, to remedy them. Section 5(a) would of its own force apply to all the rates of a natural gas company, whether long-established or newly changed, but in the latter case the power is further implemented by § 4(e). All that § 4(e) does, however, is to add to this basic power, in the case of a newly changed rate or contract (except ‘industrial’ rates), the further powers (1) to preserve the status quo pending review of the new rate by suspending its operation for a limited period and (2) thereafter to make its order retroactive, by means of the refund procedure, to the date the change became effective. The scope and purpose of the Commission’s review remain the same — to determine whether the rate fixed by the natural gas company is lawful.”

In the Sierra case, however, it was stated it was immaterial under which section the application was filed, provided the procedure for hearing and proper findings was followed, but the order could only have prospective effect.

The Potash Company contends a contract rate may only be changed by following a filing under section 50 of our Public Utility Act, but I believe the notice of hearing, hearing and a finding the public interest requires an increase in rate are the essentials, but that the Commission exceeds its authority when it allows an increase ex parte and then makes the increase retroactive following the hearing.

The Supreme Court held the Natural Gas Act gave the gas company no power to change its contracts unilaterally and that the new schedule was a nullity insofar as it purported to change the rate set by its contract with the Mobile corporation — that the contract rate remained the only lawful rate.

In the Sierra case, Pacific Gas & Electric Company, by following the rate-filing procedure prescribed by § 205(d) of the Federal Power Act, supra, had sought to abrogate a contract rate and establish a higher one. The Federal Power Commission suspended the effective date of the new rate until a later date and initiated a proceeding to determine its reasonableness. Sierra Power was permitted to intervene in the proceeding, but its motion to reject the filing on the ground that Pacific Gas & Electric Company could not thus unilaterally change the contract was denied. After completion of the hearings the commission reaffirmed its refusal to reject the filing and held the new rate not to be “unjust, unreasonable, unduly discriminatory, or preferential.” (See 7 P.U.R.3d 256.)

On Sierra’s petition for review, the Court of Appeals for the District of Columbia, 96 U.S.App.D.C. 140, 223 F.2d 605, holding that the contract rate could be changed only upon a finding by the commission that it was unreasonable, set aside the commission’s order and remanded the case with instructions to the commission to dismiss the § 205(e) proceeding, but without prejudice to the institution of a new proceeding under § 206(a) to determine the reasonableness of the contract rate.

The Supreme Court held the unilateral filing of the new rate under § 205(d) and the approval of the new rate by the commission under § 205(e) were ineffective to supersede Pacific Gas and Electric’s contract with Sierra.

It was also held the commission had the undoubted power under § 206(a) to prescribe a change in contract rates whenever it determined such rates to be unlawful. It was said [350 U.S. 348, 76 S.Ct. 371]:

“* * * While this power is limited to prescribing the rate ‘to be thereafter observed’ and thus can effect no change prior to the date of the order, the Commission’s order here, if based on the necessary findings, could have been effective to prescribe the proposed rate as the rate to be in effect prospectively from the date of the order, June 17, 1954. If the proceedings here satisfied in substance the requirements of § 206(a), it would seem immaterial that the investigation was begun as one into the reasonableness of the proposed rate rather than the existing contract rate.
“The condition precedent to , the Commission’s exercise of its power un-' der § 206(a) is a finding that the existing rate is1 ‘unjust, unreasonable, unduly discriminatory or preferential’. * * * ”

I agree with this statement, and would have the Court approve the rule of the Mobile and Sierra cases made under statutory provisions almost identical with our Public Utility Act, that a contract rate may not be changed by the utility under a mere rate-filing procedure, or by the commission in an ex parte order; but that a contract rate may only be changed, as heretofore indicated, after a hearing and finding a change is required in the public interest— that neither the filing of a new rate nor an order of the commission without notice, hearing and the requisite findings as to the public interest may change a contract rate. I believe it should further be declared that when, in this case, the Commission made and enforced its ex parte order, it was acting in excess of its authority and jurisdiction.

It is true when the case reached us the rate case had been removed to the District Court of Eddy County and the courts could not make an effective order against the Commission as to its interim rate, but there still remained the case of the Potash Company to recover the excess it paid under the interim rate, and I am convinced it should be allowed to recover such payments. The majority hold this to be a matter for determination of the District Court of Eddy County along with the rate case, thus nullifying the provision of Section 74, supra.

For the reasons stated, I dissent.