New England Telephone & Telegraph Co. v. Kennelly ( 1949 )

I am constrained to dissent because, in my opinion, the superior court had jurisdiction to grant the preliminary injunction under review if the evidence clearly showed confiscation under existing rates. The issue raised by the complainant's bill was solely that, and not whether such rates were fair and reasonable. It was, therefore, a purely judicial question cognizable by the superior court in equity. I agree that if it were a question merely of fixing fair and reasonable rates it would be legislative, and hence exclusively within the province of the administrative process prescribed by statute. The determination of such an issue cannot be removed to a court even for review of error of law until the administrative remedy is exhausted. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41.

On the other hand, the resolution of an issue of alleged confiscation of property in defiance of due process of law is beyond the exclusive province of the administrative process and cannot be confined within it by the legislature, although the legislature may vest in an administrative officer concurrent authority with the courts to grant relief from such invasion of constitutional right. However, under the judicial system in this state, a grant of power of that kind cannot divest the superior court of its exclusive original jurisdiction in such a case, unless that jurisdiction is transferred to some other court. In other words, such authority is judicial and must be vested in a court. Whether the opportunity for obtaining from an administrative officer relief under a statute, as for example § 41 or the proviso in § 45, is in fact adequate for the protection of complainant's constitutional right against alleged confiscatory rates is a proper question for the superior court in determining whether it is necessary to exercise its equitable powers in order to afford complainant such protection. That is to say, it may deny relief in equity because in its opinion complainant has an adequate remedy at law, but in any case it has jurisdiction either to grant or deny relief.

The authorities are in agreement on this point. "We find no decision of any American court," the supreme court of Georgia very recently said, "where it has been held that when confiscation is clearly shown the court will refuse an appeal of the injured party for a judgment protecting his constitutional right." Southern Bell Tel. Tel. Co. v. Georgia PublicService Comm'n, 203 Ga. 832, 871. Where adequate means were lacking under the administrative process or where the manner of administering such means was inadequate it was held in PeoplesGas Light Coke Co. v. Slattery, 373 Ill. 31, that an independent proceeding in equity was justified to prevent confiscation. There the distinction between a proceeding in equity for that special purpose and one under the administrative process to fix fair and reasonable rates was clearly pointed out. In that case an application for temporary relief was denied by the commission and the company appealed. Pending such appeal the company sought relief in equity to prevent confiscation of its property. Resort to the judicial process at that stage was held justifiable by the state supreme court which cited in support of its holding Smith v. Illinois Bell Tel. Co., 270 U.S. 587, and Prendergast v. New York Tel. Co., 262 U.S. 43.

The United States supreme court has held consistently that it is not necessary to exhaust the administrative process before invoking the aid of a court of equity to prevent daily confiscation of property resulting from alleged confiscatory rates. Oklahoma Natural Gas Co. v. Russell, 261 U.S. 290;Pacific Tel. Tel. Co. v. Kuykendall, 265 U.S. 196; Banton v. Belt Line Ry., 268 U.S. 413; Smith v. Illinois Bell Tel.Co., supra. My examination of those cases and many others similar thereto in the inferior federal courts leads me to believe that in the present juncture of the instant rate proceedings this court's denial of the judicial process to the complainant will not be followed if it seeks relief in those courts. Since the question of confiscation is in fact ultimately a federal question, or at least may be made such by an aggrieved party who is prevented from obtaining equitable relief in our state court, the federal cases are in my opinion most persuasive. If for no other reason I would prefer to be guided by them in determining the question of jurisdiction in the case at bar.

However, aside from the federal phase there is good reason for holding that in the special circumstances here the superior court had jurisdiction. Complainant, by motion duly filed, applied to the administrator for temporary emergency relief. That officer declined to give the motion immediate consideration and refused to hear argument on his authority to grant such relief or to receive evidence in support of the motion. He continued it without further consideration to await a hearing on the merits of the company's second revised schedule of rates. He finally denied it at the same time he denied such schedule of rates by decision contained in his order No. 6357 and entered in his docket No. 496.

On the face of that decision it appears that he did not deny the motion on its merits but merely pro forma. He expressly stated therein that he could not determine the motion in the time at his disposal and that it would be needless for him to try since complainant by an appeal to the public utility hearing board could obtain a full hearing on its motion there. Those are words of abdication of whatever power and authority he possessed under the statute to grant complainant emergency relief. Here, indeed, was an administrative tribunal frankly unwilling even to consider the extent of its powers to grant relief in an alleged emergency.

In view of such an arbitrary disposition of complainant's motion for relief and the extreme urgency and importance of the issues of confiscation of property and denial of due process of law raised thereby it seems to me unreasonable to send the complainant back to the same tribunal to apply for the same relief. If the administrator again refuses to accept jurisdiction or denies relief where would complainant go and how soon could those issues be determined? Apparently, according to the majority, it must remain within the administrative process and appeal to the public utility hearing board, and thereafter to this court. The delay necessarily inherent in so circuitous a procedure for obtaining emergency relief from daily confiscation of property is obvious and should give pause for the gravest consideration. In my view such procedure in a case of this kind scarcely comports with the guaranty of our Rhode Island constitution that every person within this state "ought to obtain right and justice * * * promptly and without delay * * *." Article I, sec. 5.

Complainant first applied for temporary emergency relief in November 1948. If, since that time, it has been actually suffering daily confiscation of its property in the amount that it alleges and is now going to be required to pursue the circuitous remedies indicated by the majority opinion its losses will assume impressive proportions and will be irrecoverable. Losses of that character, it was observed in Federal PowerComm'n v. Natural Gas Pipeline Co., 315 U.S. 575, cannot be made up in the future. And it was in appreciation of that very fact that this court, in Public Utilities Comm'n v. East Providence WaterCo. (R.I.), 133 A. 347, said, in suspending a stay, pending appeal, of certain rates desired by the company, "* * * it is not clear how the water company can be protected against loss, in the event that said order shall be sustained, unless an order is made that the appeals shall not operate as a stay as to them." Where such an order is thus entered permitting the company temporarily to charge a nonconfiscatory rate mere running of time does not irreparably harm the company.

In the case at bar the majority of the court, in effect, did the opposite and granted the administrator's motion to stay the order of the superior court, which was favorable to the company, pending the appeal in this court, thus restricting the company to the alleged confiscatory rates for an indefinite period. The balance of hardship was thus weighted against the company carrying with it the necessary consequence that unless determination of its application for emergency relief could be obtained promptly any loss which it might ultimately prove that it had sustained during the interim would be irrecoverable. That there was in such circumstances good ground for invoking equity and interposing an injunction would seem to be obvious. As was said in City of Council Bluffs v. Omaha C.B. St. Ry.,9 F.2d 246, 249: "If the continuance of that injury could not be prevented by a temporary injunction, it could not be prevented at all, and there is, in our opinion, no doubt that the court below had the judicial power to prevent by a mandatory injunction, if necessary, the continuation of this violation of the Constitution and irreparable injury until the hearing and decision of this case on the merits."

In the circumstances, therefore, I am of the opinion that the majority decision is tantamount to a denial of due process of law. The principle of exhaustion of administrative remedies is a false light in the instant situation and may lead to a gross injustice to the complainant. The cases cited by the majority in which that principle was the guide do not present situations at all comparable to that in the case at bar. In the first place not one of those cases involved a question of alleged confiscation of a public utility's property under alleged confiscatory rates for service.

The case of Myers v. Bethlehem Shipbuilding Corp., supra, did not even involve a public utility. In United States v.Illinois Central R.R., 291 U.S. 457, the court said that the order of the commission to the railroad was merely an order to show cause why certain proposed joint barge-rail rates should not be established in the future and thus involved only the administrative process with which the railroad should comply. No question of continuing daily confiscation of property was raised. The same is true of the case of St. Clair Borough v. Tamaqua Pottsville Elec. Ry., 259 Pa. 462. There the public utility was the defendant and it was the municipality which was seeking relief by the judicial process rather than relief within the administrative process where the court held it properly belonged.

After their discussion of those cases the majority cite several other cases but without any comment thereon. In my opinion they do not lend any aid in determining what is the appropriate remedy in a case of alleged confiscation. One of them, however, contains language which recognizes the right to an injunction in such a case. In Abelleira v. District Court ofAppeal, 17 Cal.2d 280, 296, the court, in commenting on certain cases which had been cited to it, said that they were not in point because they were cases "dealing with rate orders of regulatory commissions, where the administrative body imposes a confiscatory rate on a public utility. Continued operation of the business at the rate imposed pending the appeal may in some instances be so unprofitable as to amount to a destruction of the business, and therefore a taking of property without due process of law. The courts in these cases issue injunctions to stay the enforcement of the new rate until a final determination of its validity, in order to protect the constitutional rights of the petitioning utilities. In brief, these decisions establish the right to equitable relief to protect the property rights of a petitioner from irreparable injury immediately threatened by a void administrative act."

On the other hand, the large number of cases which the majority list in their opinion as exceptional are examples of alleged confiscation to prevent which equity was properly invoked. In those cases the court declined to confine the utility to the administrative process because the question raised was a judicial question which did not require awaiting exhaustion of administrative remedies. In this respect Oklahoma Natural GasCo. v. Russell, 261 U.S. 290, Smith v. Illinois Bell Tel.Co., 270 U.S. 587, and Prendergast v. New York Tel. Co.,262 U.S. 43, are especially significant. The fact of the matter is they are exceptional only because they are cases which involved alleged confiscation of the property of a public utility under existing or threatened confiscatory rates for service, and as such were not considered within the administrative process so as to call for the application of the principle of exhaustion of administrative remedies.

In the case at bar it is to be noted that the company did not ignore any possible remedy for emergency relief within the administrative process. On the contrary, it applied to the administrator and he denied, out of hand so to speak, its motion for such relief. Complainant then appealed to the public utility hearing board. Under the authorities above cited it did not have to pursue that remedy further before seeking the aid of equity in order to prevent confiscation of its property. Whether or not the remedy by statute was fully adequate to protect complainant's constitutional right was for the superior court to decide. But in any event, in my opinion, its jurisdiction, in the exercise of its equity powers, to grant or deny relief cannot be successfully questioned.

I am, therefore, not persuaded by the majority's discussion of complainant's failure properly to apply for emergency relief to the administrator. That matter, in my view, cannot adversely affect the jurisdiction of the superior court. Even though the administrator may be vested with the power under § 41 or under the proviso in § 45 to grant temporary emergency relief it does not follow that thereby the superior court has been or could be deprived of its judicial power in equity to prevent the taking of complainant's property without just compensation. Complainant is entitled to choose that remedy in preference to the statutory remedy if deemed by it to be more efficacious in the protection of its constitutional right; and the superior court may apply such remedy if it feels that complainant has not a remedy at law adequate for that purpose.

As for the majority view that the administrator has dealt fairly with the complainant in that he has, in effect, granted it immediate temporary relief by allowing his order of April 15, 1948 to become effective notwithstanding complainant's appeal to the public utility hearing board, I cannot agree. In the first place no question of emergency relief was presented to the administrator before that order was issued. Complainant's motion for such relief was not filed until sometime in November 1948 after such order had been in effect several months. In the second place the administrator had no power to stay his order pending appeal to the public utility hearing board. That order provided for new permanent rates, not temporary rates, and became effective of necessity because the statute does not provide for a stay thereof pending such an appeal as it does pending an appeal from the board to this court. I can find nothing in the statute which supports the majority view that complainant's appeal to the public utility hearing board necessarily vacated the administrator's order establishing new permanent rates. To say that it did raises a grave question of legality of those rates now being charged by complainant.

To summarize, the rates fixed by that order are not temporary but permanent and whether they are fair and reasonable is a question raised by the appeal to the board. That question is exclusively administrative and must ultimately be decided within the administrative process. Until the board decides the appeal those rates are in effect by force of the statute and not by grace of the administrator. The question of minimum rates to betemporarily charged pending such determination in order to prevent confiscation of complainant's property is an entirely different question and one that is clearly judicial in its nature. Complainant properly submitted it for determination to the superior court.

I express no opinion on the merits as to whether complainant clearly proved its allegation of confiscation, nor on the subsidiary question whether certain evidence was competent, relevant and admissible to prove the fact of alleged confiscation. Consideration of those questions is not necessary to a determination of the question of the superior court's jurisdiction. On my view of the jurisdictional question it would be necessary for the court to pass upon those questions but on the majority view we do not reach them.