96 Kan. 372 | Kan. | 1915
The opinion of the court was delivered by
In January, 1912, the attorney-general commenced an action in the district court of Montgomery county, entitled The State of Kansas v. The Independence Gas Company, The Consolidated Gas, Oil & Manufacturing Company, and the Kansas Natural Gas Company. The petition charged that the defendants were violating the antitrust laws of the state, and prayed for an ouster of the defendants and the
In December, 1914, the creditors and stockholders of the Kansas Natural Gas Company entered into a stipulation and agreement fixing the amounts that were due the bondholders, lienholders and stockholders of the Kansas Natural Gas Company and the companies subsidiary thereto. This agreement provided that the receivers might, as expeditiously as possible and whenever deemed advisable by the court, make application to the public utilities commission for compensatory rates for gas. On April 9, 1915, under the direction of the court, the receivers filed with the public utilities commisson an application for compensatory rates for gas. After hearing the application, the commission, on July 16, 1915, made find
On July 26, 1915, on the application of the receivers, the district court entered an order making the public utilities commission a party defendant in the action in which the receivers were appointed. The receivers then presented a petition to that court, asking that the commission be enjoined from enforcing any and all orders made by the public utilities commission; and that the court, upon the final hearing of the petition, fix and determine a fair, lawful, reasonable and compensatory rate to be paid for natural gas supplied by the receivers in the state of Kansas. Summons and a temporary restraining order were issued and served on the commission in Shawnee county. On August 7, 1915, the public utilities commission appeared specially and presented a motion to the court to quash the summons and service thereof, challenging the jurisdiction of the court on the grounds that neither of the commissioners was served with summons in Montgomery county, and that their official residence was in Topeka, Shawnee county. This motion was denied August 12, 1915. On August 17, 1915, H. O. Caster, attorney for the public utilities commission, filed in this court an application for an alternative writ of mandamus against Thomas J. Flannelly, judge of the district court of Montgomery county, and John M. Landon and R. S. Litchfield, receivers of the Kansas Natural Gas Company, praying that Thomas J. Flannelly, judge of theJ district court, be commanded to vacate and set aside the order'
On August 24, 1915, the public utilities commission filed in the district court of Montgomery county its demurrer to the petition of the receivers, not waiving any rights under the motion to quash, and, continuing to challenge the jurisdiction of the court, demurred on the grounds that the court had no jurisdiction over the persons of the defendants, or either of them, and had no jurisdiction over the defendant, the public utilities commission, or the subject matter of the action. This demurrer was overruled August 25, 1915. • The public utilities commission then announced in open court that it elected to, and did, stand upon its demurrer. The commission did not plead further. On the same day notice of appeal from the decision of the court in overruling the demurrer of the public utilities commission was filed. The appeal was filed in this court September 9, 1915. After the demurrer was overruled, the receivers introduced evidence in support of their petition, and on August 27 the court found
The gas sold by the receivers is produced in both Kansas and Oklahoma. It is transported from the wells through pipe lines beginning in Oklahoma, entering the state of Kansas near Coffeyville, at which place gas is first distributed and sold to consumers. The remainder is transported north through pipe lines into which gas from wells in Kansas is conveyed, and the gas from Oklahoma and Kansas is then transported through the same pipe lines and through pom-
1. The first question presented is, Did the district court of Montgomery county obtain jurisdiction of the public utilities commission by the proceedings had against the commission in that court? The receivers cite White v. Ewing, 159 U. S. 36, 40 L. Ed. 67; Peck v. Elliott, 24 C. C. A. 425, 79 Fed. 10, 38 L. R. A. 616; Savings Bank v. Simpson, 22 Kan. 414, and a number of other authorities.
In 40 L. Ed. 67, we find this headnote to White v. Ewing, supra:
“Any suit by or against a receiver appointed in a general creditors’ suit pending in the United States circuit court against a corporation, whether for the collection of its assets, or for the defense of its property rights, is ancillary to the main suit, and within the jurisdiction of such circuit court, regardless either of the citizenship of the parties or of the amount in controversy.” ■ -
“For the purpose of collecting in ehoses in action, the court might direct its receivers to institute independent suits in that or courts of the state, or cause such debtors to be made defendants in the principal cause, and determine for itself any question which might be involved by the defenses to the claim.” (p. 427.)
In Savings Bank v. Simpson, supra, this court said:
“The appointment of a receiver by a district court secures to that court the power to control, at its discretion, all controversies which affect the property placed in his custody as such receiver.” (Syl. ¶ 1.)
The public utilities commission calls attention to sections 50 and 55 of the code of civil procedure. These sections, in part, read as follows:
§ 50. “Actions for the following causes must be brought in the county where the cause, or some part thereof, arose:
“Second — An action against a public officer for an act done by him in virtue or under color of his office, or for neglect of his official duties.
§ 55. “Every other action must be brought in the county in which the defendant or some one of the defendants resides or may be summoned.”
The language used in upholding the authority of a court over all matters affecting the property or estate in the hands of receivers is very broad. However, there must be some Jimit to the authority of a court to bring before it all parties who may have or set up a claim adverse to the receivers. If the receivers claim that certain real property belongs to the estate in their hands, and another party is in possession and claims adversely to the receivers, and it is necessary to bring an action to obtain possession thereof, where will the action be brought? In the court and in the cause in which the receivers were appointed, or in the county where the land is situated? There is but one reasonable answer to this ques-. tion, and that is, that such an action must be brought in the county where the land is situated. If the receivers, as a part of the assets of the estate in their hands, hold a mortgage on real property situated in another county, and it is necessary to foreclose that mortgage, where must that foreclosure take place? Necessarily in the county where the land is situated. If it becomes necessary to sue on a note held by receivers, and all those liable on the note reside outside the county in which the receivers have been appointed, where will that action be brought? The language in a number of decisions is broad
The receivers contend that under section 50 of the code, supra, they have the right to sue the public utilities commission in Montgomery county, because part of their cause of action arose in that county. It is argued that the receivers are residents of Montgomery county and have a right to have compensatory rates for gas; that these rates have been denied them; and that under the authorities, where the statute is qualified by the words “or some part thereof,” the venue is either where the receivers reside, who had the right, or where the commissioners reside, who denied the right.
What part of the receivers’ cause of action against the' commission arose in Montgomery county? They say their right to sue, their right to protect the property in' their control. All persons have a right to sue when their rights of person or property are invaded. A state officer acting under the law, at the capital, may perform an act which some individual somewhere in the state believes invades his rights or does him a wrong. Such party can not sue unless his rights have been invaded, but that invasion by an act wholly performed in another county does not give the aggrieved party the right to sue outside the county where the act was done. The action in the district court stands just the same as if the receivers were attempting to contest the validity of an act of the legislature, and were seeking to enjoin the attorney-general, or the auditor of state, or the tax commission, or the state board of health from proceeding thereunder.
The evident purpose of the statute is to confine actions on
“The language of this section is plain, and needs no comment from us. By it proceedings against public officers for official acts are referred to the courts of the county where the acts are done. It is an expression of the purpose of the legislature to localize suits against officers. It relieves them from the necessity of deciding between the conflicting orders of courts of different counties. They are amenable only to the courts of the county in which they are acting.” (p. 80.)
(See Fay v. Edmiston, 28 Kan. 105, 108.)
This question should not be disposed of without an examination of section 35 of the code of civil procedure, which reads:
“Any person may be made a defendant who has, or claims, an interest in the controversy adverse to the plaintiff, or who is a necessary party to a complete determination or settlement of the question involved theréin.”
The state of Kansas is plaintiff in the action in the district court of Montgomery county. The public utilities commission does not claim adversely to the plaintiff. The commission has no interest whatever in the controversy. It is not a necessary party to a complete determination or settlement of the questions involved in the action, as disclosed by the pleadings. The commission may make an order, under the law, that affects the property involved in the controversy, but that does not make the commission a necessary party to a complete determination of the matters in controversy. State officers executing laws affecting property in the hands of receivers are not for that reason necessary parties to the action. in which the receivers were appointed. Neither is the public utilities commission a necessary party in the action now pending in Montgomery county. It follows that the district court did not have jurisdiction of the public utilities commission, or of any member of it.
2. The next question is, Are the receivers subject to the control of the public utilities commission, under the public utilities act? (Laws 1911, ch. 238.) The Kansas Natural Gas Company, whose property is now in the possession of the receivers, and whose business is now being conducted by them,
3. Who has the power to fix the rates at which natural gas shall be sold by the receivers of the Kansas Natural Gas Company, the public utilities commission, or the court appointing the receivers? The legislature has said that the public utilities commission shall fix these rates. The courts have repeatedly declared that the courts can not fix rates, and that fixing rates is a legislative function. When rates are fixed, the courts can ascertain whether or not they are in violation of law or of some constitutional provision. But courts have not the authority to determine what rates will be reasonable, just, compensatory, or legal, and then put in effect those rates. The commission can not finally determine what rates will be legal and will not violate constitutional provisions. The commission is the body authorized by law to say in the first instance what rates are legal and will not violate constitutional provisions, but the courts must finally say whether or not the rates fixed are illegal or do violate such provisions. The one function is legislative, while the other is judicial. The commission can not invade the field occupied by the court; neither can the court invade the field occupied by the commission. The commission must act first, and the courts afterward.
4. It is contended that the receivers are engaged in interstate commerce, and for that reason are beyond the control of the public utilities commission. That the transportation of natural gas from one state to another is interstate commerce must be conceded. (West v. Kansas Natural Gas Co., 221
“The general rule is that as long as an article imported remains in the hands of the importer in the original and unbroken package in which it was imported, it is protected by the 'commerce clause of the •constitution from the interference of state laws, and that it is only when the original package has been sold by the importer or has been broken up by him or has otherwise become mixed with the common mass of property in the state, that it becomes subject to state legislation.”
(The original package rules will be of some assistance, in' determining whether or not the receivers’ sale of gas in this' state is interstate commerce. The original package of gas is broken when the first gas is taken out of the pipe lines and sold in this state. Thereafter the gas ceases to be an article of interstate commerce. The gas, when sold, had become mixed with the common mass of property in this state by being so commingled with gas produced here as to completely lose its identity. > It is a matter of common knowledge that service pipes from the pipe lines of the distributing companies to private residences and other buildings belong to the owners of the property served, and installations are made at their expense. If the analogy of original packages or importation of property in bulk applies to gas in the mains, it ceases to apply when thousands of service pipes are filled with gas to be drawn off at such times and in such quantities as the individual consumer desires. Interstate commerce is at an end when the bulk of the imported gas is broken up for indiscriminate distribution to individual purchasers at retail sale. The gas then becomes mixed with the common mass of property in the state. To exclude the power of the state from control over an article imported into it, it is necessary that the article be capable of being pointed out and identified, and the owner be able to say, “This came from another state, and has
All property now owned in this state, and not produced here, was at one time a part of interstate commerce. The goods on the merchant’s shelf, the wagons and plows in the farmer’s field, the horses and cattle that he has imported from another state, were all a part of interstate commerce at one time, but have ceased to be such, although they have not been sold and are still owned by the persons who imported them. These ceased to be under the protection of the interstate commerce clause of the constitution when they became a part of the property of this state. The farmer who imports a wagon, a horse, a carload of corn, or a piano, may or may not intend to sell the article imported. Does the interstate commerce character of this property attach until it is sold? It does not. It can not. A carload or a trainload of wheat may be shipped from this state to Kansas City, Mo., and be there placed in an elevator and mixed with another carload or trainload of wheat from some county in Missouri, and may be held for delivery to some one who has ordered it, or be held for sale to any one who will buy it. Will that wheat from Kansas, after being commingled with the wheat from Missouri, be under the protection of the interstate commerce clause of the federal constitution and outside the control of Missouri, under laws legally enacted by its legislature ? If this question is answered in the affirmative, it extends interstate commerce much farther than any decision of any court yet rendered of which we have any knowledge or information. Before selling natural gas it became necessary to obtain franchises from the several cities under the laws of this state. These laws provided that in certain classes of cities the franchises might name the price at which gas should be sold. If the business done by the receivers in this state is interstate commerce, and the state has no power to regulate the price at which gas may be sold, the laws providing fox-fixing rates in franchises were invalid, so far as gas coming from another state is concerned.
5. Granting for the moment that the sale of natural gas under the circumstances disclosed is interstate commerce, it is not national in its nature, it admits of no one uniform system of regulation, and it is not that kind of interstate commerce which
“Upon this point we -affirm that natural gas is characteristically and peculiarly a local product, that its production is confined to a limited territory, that because of its local characteristics and peculiárities it is a proper subject for State legislation, and can not, so far as regards local protection, be made the subject of general legislation by Congress; or; at all events, that it does ‘not require a uniform system as between the States’ for its regulation.” (p. 573.)
A very similar question was disclosed in Manufacturers’ Light & Heat Co. v. Ott, 215 Fed. 940, where this language is found:
“We are unable to agree that the fixing of the rates to be charged by complainants to their customers in West Virginia is an unlawful regulation of interstate commerce. The regulation of companies engaged in the transportation of gas is expressly excluded from the scope of the interstate commerce statute. Neither the West Virginia statute nor the orders of the Commission purport to interfere in any manner with the transportation of natural gas from West Virginia to other states. Nothing is attempted except the regulation of the prices of natural gas to the citizens of West Virginia to be charged by corporations operating in West Virginia under state authority. The action of these corporations in uniting their operations with those of like corporations of Ohio and Pennsylvania in pumping gas into a common system of pipes supplying customers in the three states may produce the result that some gas from Ohio and Pennsylvania comes into West Virginia, although it is undisputed that a much larger quantity of gas goes out of West Virginia into Ohio and Pennsylvania than can possibly come in from these states. But this interflow of gas from one state to another according to the pressure from the main gas pipes as common reservoirs can not affect the power of the state of West Virginia to make reasonable regulations as to rates for gas furnished to its own citizens. West v. Kansas Natural Gas Co., 221 U. S. 229, 31 Sup. Ct. Rep. 564, 55 L. Ed. 716, 35 L. R. A., n. s., 1193, relied on by complainants, has no application, for in the present case no effort is made to prevent the transportation and sale of natural gas from West Virginia into other states. It is not necessary to decide whether the Congress may not regulate charges for natural gas under such conditions, and under the well-known rule the court should not anticipate that question. In the present state of the law, the Congress having taken no action, it was clearly within the power of the state Legislature to provide for the protection of its own citizens against excessive charges. If it b.e, assumed that interstate commerce will be incidentally affected, yet the*386 regulation of the local charges of a natural gas company as a public service Corporation is within the police power of the state until the Congress Sees fit to act.” ■ (p. 944.)
Congress has not acted in this field, except to prohibit unfair methods of competition. We hold, therefore, that the receivers are not engaged in interstate commerce when selling natural gas to consumers thereof in this state.
6. ' The commission did not make an order fixing rates for gas at 28 cents per thousand cubic feet. A suggestion is made that when Missouri fixes rates at 28 cents per thousand the commission will fix rates at that figure. The commission may change its opinion. It may not fix those rates. It may leave the rates where they are. It may advance them to 30 cents or 35 cents. Until an order of the commission is fully, finally and completely made. a writ of mandamus will not issue to enforce it.
7. The last question for our consideration concerns the legality of the rates, both those that are in existence at the present time and those named in the opinion of the commission. The commission finds that where the net price of gas to consumers is now 25 cents per thousand cubic feet the rate should be increased to 28 cents. This, in effect, is a finding that the rates now in existence are not compensatory. It then became the duty of the commission to fix compensatory rates, taking into consideration the gas sold in Missouri, assuming that compensatory rates will be fixed in Missouri. However, wé may say that obedience to law in making rates in Kansas can not legally be made dependent on obedience to the same law in Missouri. The nonobservance of a law in one state or community is no excuse for the nonobservance of the same law in another state or community. The finding of the commission prevents this court from issuing any writ of mandamus to compel the receivers to continue the sale of gas in those places at the rate of 25 cents. The district court finds that the rate of 28 cents will be confiscatory, and in its findings shows, or at least undertakes to show, among other things, wherein the commission has omitted substantial. amounts which' should have been included in the items necessary to be met by' the revenue derived from the sale of gas. The commission, in answer to these criticisms of the court, says that some
The demurrer of the public utilities commission to the receivers’ petition is sustained, and the injunction against the commission is set aside. No writ of mandamus will issue at this time. The action in this court is dismissed as to the Hon. Thomas J. Flannelly, but is retained as to defendants John M. Landon and R. S. Litchfield, for such orders and judgments as may be hereafter made.