18 P.2d 523 | Okla. | 1932
This is an appeal from an order of the Corporation Commission of the state of Oklahoma establishing a rate to be charged the consumers of natural gas for domestic and industrial purposes in the city of Poteau, Okla., and involving certain contracts entered into between consumers and the American Indian Oil
Gas Company, a public utility engaged in the production and distribution of natural gas for domestic and industrial purposes. The company was organized in 1917 and at the time of its organization the Le Flore County Gas Electric Company, a corporation, was engaged in the production and distribution of gas in the city of Poteau, and was operating under a franchise from the city furnishing gas for 25 cents per 1,000 cubic feet for domestic purposes and a graduated scale with a minimum of five cents per 1,000 cubic feet for industrial purposes. The American Indian Oil Gas Company after drilling for and discovering gas had no market for its gas and desired to enter the city of Poteau to compete with the Le Flore County Gas
Electric Company in the distribution of gas in the city of Poteau for domestic and industrial purposes. The matter was submitted to popular vote and a franchise was granted to the American Indian Oil Gas Company wherein that company agreed to at all times and under all circumstances furnish gas for domestic and industrial purposes to the citizens of Poteau at a rate never to exceed the sum of 15 cents per 1,000 cubic feet. In addition to this the company thereafter entered into a number of contracts with industrial plants which located at Poteau on account of their representations as to the volume and inexhaustible supply of gas they had and the rate which they would charge for their gas, and a number of contracts were entered into by the company for the sale of gas which were introduced in evidence upon the trial of this case. Subsequently to this time the American Indian Oil Gas Company purchased from the Le Flore County Gas Electric Company at the pipe line of said company at the rate of five cents per 1,000 cubic feet. This gas was conveyed by the Le Flore County Gas Electric Company to the city of Ft. Smith, Ark., a distance of approximately 30 miles, and sold for 15 cents per 1,000 cubic feet to the distributor, who in turn sold gas to the citizens of that city for 25 cents per 1,000 cubic feet. After acquiring the gas distribution property of its competitor and eliminating any competition in the distribution of gas in the city of Poteau, the American Indian Oil Gas Company applied to the Corporation Commission of Oklahoma for an increase in its rates, said application being made in the year 1922. About January 1, 1923, a temporary domestic rate of 25 cents per 1,000 cubic feet was agreed upon at a conference held between the citizens of Poteau, representatives of the American Indian Oil Gas Company, and representatives of the Corporation Commission. On January 14, 1923, at a hearing on the application of the American Company, the Corporation Commission promulgated Order No. 2256, by the terms of which a rate of 20 cents per 1,000 cubic feet for the first 1,000 cubic feet was made effective, and for all gas consumed over 100,000 cubic feet at the rates which were at that time in effect and which had been voluntarily made by the American Company. Subsequent to this time a motion for rehearing was filed and granted by the Corporation Commission. Thereafter, in January, 1924, another application for increase in rates was filed before the Corporation Commission. By agreement between all parties concerned, the two cases were consolidated, and upon a final hearing the Commission promulgated Order No. 2507. An appeal was taken by the American Indian Oil Gas Company from Order No. 2507, and this court, in April 1925, affirmed the order of the Corporation Commission. American Indian Oil Gas Company v. Poteau,
40 cents per 1,000 cubic feet for first 50,000, 25 cents per 1,000 cubic feet for next 150,000, 20 cents per 1,000 cubic feet for next 300,000, and 10 cents per 1,000 cubic feet for any in excess of 300,000.
The cause in the United States District Court was referred to Paul G. Darrough, as special master, to take testimony and report findings of fact and law and make recommendations. The case was heard at *242 length before the special master and a voluminous record was made of the testimony, a copy of which report forms a part of the record in this appeal designated as Exhibit "B" and having been introduced in evidence under agreement subject to certain limitations expressed therein. Thereafter the special master made his report consisting of 91 typewritten pages and filed the same in the United States District Court to be considered by the three judges assigned to hear said cause. Thereafter, in the latter part of September, 1927, it having been determined by the three judges assigned to hear said cause in the United States District Court that it was not a case to be decided by three judges, the same was assigned to Judge Woodrough for an opinion, and in September, 1928, Judge Woodrough rendered a memorandum opinion which appears at pages 262-267 of record A in this appeal. In the opinion the United States Court held that the findings made by the special master were substantially correct, but held that the action was prematurely brought and directed that a journal entry be made continuing the restraining order in effect long enough to permit the plaintiff to make a new application to the Commission to fix a new rate in accordance with the changed condition of the company's business, and providing further that after that date the plaintiff's bill be dismissed without costs to either party except the fees of the master and reporter be divided equally to each party. On September 11, 1927, the American Indian Oil Gas Company filed its application with the Corporation Commission of Oklahoma claiming a three year deficit of $41,485.62, and asking that they be permitted to charge their customers the following rates:
First 50,000 cubic feet 45 cents. Next 100,000 cubic feet 30 cents. Next 300,000 cubic feet 25 cents. Over 500,000 cubic feet 12 cents.
On November 10, 1927, the city of Poteau filed its response to said application, the application and response being set out in the record. After hearing before the Commission on March 13, 1928, it entered an order that the American Indian Oil Gas Company be and it is hereby authorized to place into effect the following schedule of rates to be charged for natural gas transmitted, sold, and delivered for public consumption in the city of Poteau, Okla., to wit:
For the first 50,000 cubic feet 40 cents per 1,000 cubic feet,
For the next 150,000 cubic feet 25 cents per 1,000 cubic feet,
For the next 300,000 cubic feet 18 cents per 1,000 cubic feet,
All over 500,000 cubic feet 10 cents per 1,000 cubic feet.
From this order the city of Poteau appealed to this court.
The order of the United States District Court was not that the Corporation Commission was to investigate the facts relative to the rate promulgated by Order No. 2507, as the United States District Court had held that such order was confiscatory in its nature and directed the Commission to fix a new rate in accordance with changed conditions of the company's business since the date that the special master reported his findings to the court. We fail to find wherein the Corporation Commission fully investigated conditions after that date to determine a fair, just, and reasonable rate for natural gas used and useful in supplying the city of Poteau at time of inquiry. This was the matter that was left open by the decision of the United States District Court for the Corporation Commission to pass upon.
It was held in Atchison, Topeka Santa Fe Ry. Co. v. State,
There has been some discussion in this case, and in the companion cases on the contracts, that the decision of this court in
There is also discussion in the briefs in this case and in the companion cases that the rate fixed in the contracts between the utility company and the industrial consumers are binding and that the same are not disturbed by the decision of the Corporation Commission. Under the Constitution and statutes of this state parties may enter into a contract relative to the rate to be charged by a public utility to a consumer and such contract may be valid and binding until such time as the Corporation Commission is called upon to establish a rate relative to consumers coming within that class, and when a rate is established by the Corporation Commission the terms and provisions of the contract relative to such rate yield to the rate established by the Commission, and we do not mean by this to hold that all contracts entered into between a public utility and a consumer are valid. Some of them may be valid until a rate is established and others may be void from their inception in that they may discriminate between users of gas coming within the same classification. To illustrate, if A. uses 200,000 cubic feet of gas per day and B. uses the same quantity and a public utility should enter into a contract to supply A. gas at four cents per 1,000 cubic feet and charged B. six cents, clearly the contract with A. would be void in its inception as discriminating against another consumer coming within the same class. Such contracts must be just, fair, and reasonable and not discriminating. Southern Oil Corporation v. Yale Natural Gas Co.,
As modified, the order of the Commission establishing a gas rate is held valid, subject to further review in accordance with the views herein expressed.
CLARK, V. C. J., and RILEY, HEFNER, *245 CULLISON, McNEILL, and KORNEGAY, JJ., concur. LESTER, C. J., and ANDREWS, J., absent.
Note. — See under (1) annotation in 15 L. R. A. 322; 12 R. C. L. 896; R. C. L. Perm. Supp. p. 3206; R. C. L. Pocket Part, title "Gas," § 35. (6) 6 R. C. L. 180; R. C. L. Pocket Part, title "Constitutional Law," § 180.