296 N.Y. 374 | NY | 1947
Lead Opinion
The Public Service Commission appeals pursuant to leave granted by the Appellate Division, Third Department, upon certified questions of law, from an order of the Appellate Division and a judgment thereon which reversed orders of the Special Term, Albany County, granting defendants' motion for judgment on the pleadings and dismissing the complaint. The Appellate Division granted a temporary injunction against enforcement of the commission's order prescribing permanent rates and struck out four separate defenses in defendants' answer. The following questions were certified:
"1. Is the plaintiff entitled to maintain this action?
"2. Does the complaint state facts sufficient to constitute a cause of action?"
In a prior suit beween the same parties, brought to enjoin temporary rates established by the commission's order of May 27, 1943, we affirmed a dismissal of the complaint (Staten IslandEdison Corp. v. Maltbie,
Allegations of ultimate fact held sufficient to show confiscation in Prendergast v. N.Y. Tel. Co. (
The questions certified involve plaintiff's right to maintain the action in equity and the sufficiency of the allegations to warrant injunctive relief. Each of these questions depends upon the adequacy or inadequacy of the remedy available to plaintiff by a certiorari order under article 78 of the Civil Practice Act to review the rate orders of the Public Service Commission.
In People ex rel. Consol. Water Co. v. Maltbie (
This was a rate case and we declared, in regard to the scope of our review (p. 366): "In this court the determination of the Commission upon any question of fact is not open to review. We may reverse a decision or annul a determination only for erroneous determination of a question of law, and after careful consideration of the appellant's argument, we find no errors there. Upon every point where the determination of the Commission is challenged we find that there is evidence to support *381 the conclusion of the Commission and room for the exercise of choice."
This is the established rule in certiorari proceedings to review rate orders of the Public Service Commission and it is applied generally in certiorari proceedings to review determinations of administrative boards (People ex rel. N.Y. Queens Gas Co. v. McCall,
Faced with this limitation upon the jurisdiction and power of the Appellate Division in certiorari proceedings to review a determination of the commission, and seeking an independent consideration by a court of the facts upon which its claim of constitutional right is predicated, plaintiff has brought this plenary action in equity to enjoin confiscation of its property used and useful in the public service, claiming that as a matter of constitutional right it is entitled to a fair opportunity of submitting the issue of confiscation to a judicial tribunal for determination upon its own independent judgment as to both law and facts (Ohio Valley Co. v. Ben Avon Borough,
When the Consolidated Water Co. case (supra) went to the Supreme Court of the United States, the water company sought to raise this question. The Supreme Court held (pp. 159-160): "Appellant contends that it is entitled to the exercise of the independent judgment of a court as to the law and the facts with respect to the issue of confiscation and that such a review has not been accorded because of the limitations imposed by the state practice in certiorari proceedings. 275 N.Y. at p. 370 * * *. Appellant has no standing to raise this question as appellant itself sought review by certiorari and has not invoked the plenary jurisdiction of a court of equity and it does not appear that this remedy is not available under the state law."
We are now confronted with that question.
The Ben Avon case (supra) has never been overruled; on the contrary the principle that where constitutional rights of *382
liberty or property are involved due process requires independent judicial determination of the constitutional question in the courts, has been reaffirmed. (St. Joseph Stock Yards Co. v.United States,
In Phillips v. Commissioner (
An analogy is found in the right to judicial determination on habeas corpus of a claim of citizenship when one is held for deportation under the immigration laws of the United States (NgFung Ho v. White,
There would indeed be a very drastic limitation upon the constitutional powers of the Supreme Court of the State if it may not enjoin an unconstitutional deprivation of property because of an administrative determination of constitutional right supported by administrative findings of fact believed to be wrong upon a fair consideration of the record. The remedy by certiorari proceedings being thus limited is inadequate in the protection of constitutional right and, in view of the decisions of the Supreme Court of the United States, is lacking in due process. Under these circumstances the Supreme Court of New York as a constitutional court may entertain an action for an injunction, the statutory remedy by certiorari being inadequate.
We are constrained to conclude that the plaintiff is entitled to maintain this action and that the complaint states facts sufficient to constitute a cause of action.
In reaching this conclusion we are not unmindful of the arguments advanced on grounds of convenience, well stated by FOSTER, J., in the court below: "Obviously this is an important question in the field of public utility regulation. It is a simple *383
matter to allege confiscation in any rate matter, and if such an allegation is sufficient to invoke the jurisdiction of equity then the way is open for separate trials of the same issues in every rate case; first before the commission, and later at an Equity Term of the Supreme Court. Something rather extraordinary is required to justify a procedure so protracted and cumbersome." (
We find no compelling necessity for a trial de novo of every rate case in which confiscation is claimed. The illegality in such cases is confiscation or deprivation of property without due process of law. The legality of the rate must primarily depend upon the proceedings before the commission, and the record of those proceedings will of necessity be before the trial court since the statute authorizes determination in the first instance by the commission, and the courts may not properly consider the question without knowledge of the administrative record (Railroad Commission v. Oil Co.,
We find nothing inconsistent with such a practice in the oil and gas proration cases: Thompson v. Consolidated Gas Corp.
(
The Power Commission cases (supra) arose upon petitions to review orders of the Federal Power Commission under subdivision (b) of section 19 of the Natural Gas Act (U.S. Code, tit. 15, § 717r, subd. [b]). In discussing the scope of review in these cases, Chief Justice STONE, writing for the court in PowerComm. v. Pipeline Co. (supra) said (p. 585): "By long standing usage in the field of rate regulation, the `lowest reasonable rate' is one which is not confiscatory in the constitutional sense. [Citations.] Assuming that there is a zone of reasonableness within which the Commission is free to fix a rate varying *384 in amount and higher than a confiscatory rate [citations], the Commission is also free under § 5 (a) to decrease any rate which is not the `lowest reasonable rate.' It follows that the Congressional standard prescribed by this statute coincides with that of the Constitution, and that the courts are without authority under the statute to set aside as too low any `reasonable rate' adopted by the Commission which is consistent with constitutional requirements." The opinion then proceeds to a full review of the facts upon which the commission made its determination leading to the conclusion that such determination was consistent with constitutional requirements. In the oil and gas proration cases (supra) the proceedings were by injunction in the Federal courts.
In none of these decisions was the right to try the issue of confiscation disputed. Indeed that was the judicial process pursued in each one of these cases. The opinions are helpful in showing the deference with which a court should consider the findings and conclusions of an expert administrative commission. No doubt a court of equity in this State will be largely influenced by the practice which prevails in the Federal courts.
Counsel for the commission have suggested that the case is of such compelling importance that if judicial review of the question of confiscation is a constitutional requirement, we should broaden the scope of review in certiorari proceedings so as to permit review of that question on the facts as well as the law. This of course we may not do in view of the established limitations on such proceedings to which we have referred. If such changes are desirable, the Legislature, but not the courts, should make them.
Order affirmed, with costs, and each of the questions certified answered in the affirmative.
Dissenting Opinion
Plaintiff is a New York State corporation doing an intrastate business in the production and sale of electric power. After hearings and other appropriate proceedings before it, defendant Public Service Commission made and promulgated its order fixing permanent rates to be charged by plaintiff. Plaintiff thereupon brought the present suit in equity to enjoin the enforcement of the order. The complaint herein asserts that the rates so established by defendant commission are so low as to be confiscatory *385
of plaintiff's property and thus unlawful under the Fourteenth Amendment to the United States Constitution and section 6 of article I of the Constitution of this State. The commission moved to dismiss the action on the ground that plaintiff's only recourse to the courts is by way of a petition for an order of certiorari under article 78 of the Civil Practice Act, and that no suit in equity lies to contest commission-fixed rates. Plaintiff's retort is that, while certiorari is available, it is not a constitutionally adequate remedy. In certiorari proceedings, plaintiff points out, there would be no new trial and findings by the court on the disputed questions of fact as to value, etc., but only a review by the court of the commission's findings, to see if they were reasonable and supported by substantial evidence (People ex rel. N.Y. Queens Gas Co. v.McCall,
Let us at once dispose of the idea that the present decision merely gives plaintiff its choice between two established modes of attacking, in the courts, commission-fixed rates. At a later point in this opinion we will deal more extensively with the historical background of rate review in New York, but we *386
point out now that the decision below in this case was the first in any appellate court in this State allowing a public utility corporation to try out anew, in a separate suit, the factual questions, as to value, return, etc., already submitted to, and determined by, the commission to which the Legislature has delegated sole authority in that field. Such cases as MunicipalGas Co. v. Comm. (
If it were not for the Ben Avon case (supra) and the structure of argument built thereon, we could dispose of plaintiff's suit summarily, for it is settled in the decisions of this court that no such bill in equity lies. Certiorari is the remedy provided for reviewing the Public Service Commission's rate orders (People ex rel. Central Park North East River R.R.Co. v. Willcox,
Standing on those prior decisions of ours, we could stop at this point and vote for a dismissal of the present suit. But the prominence given the Ben Avon case (supra) in the briefs here, and a desire to pay due attention to the decisions of the Supreme Court, prompts some further discussion. The Ben Avon
opinion does say that, in rate cases "if the owner claims confiscation of his property will result, the State must provide a fair opportunity for submitting that issue to a judicial tribunal for determination upon its own independent judgment as to both law and facts; otherwise the order is void because in conflict with the due process clause, Fourteenth Amendment" (253 U.S. at p. 289). On its face, in its setting and against its particular factual background, that quoted language does seem to mandate a full new trial in the courts of facts disputed before the commission, and it has been frequently cited by judges and commentators as meaning just that. Whether or not it has been (implicitly but not explicitly) overruled by later cases in the same court (see Railroad Commission v. Oil Co.,
This court, itself, after the Ben Avon decision, again tested our certiorari procedures by that case's rules and found that they stood the test (Consolidated Water case, supra). This court thought then that due process does not require that any fact be tried out twice in separate tribunals before a binding result be reached. The property owner who charges confiscation is given a court determination of that issue, but the issue is decided by the court on the reasonable factual holdings made by another competent tribunal, as to values and other items basic to rate making. That special tribunal created and equipped by the Legislature for the special task has already investigated the facts and arrived at an appropriate rate. All of that is then examined by a court to see if the owner's rights are being violated. A brief look at the development of the law of rate making will show, we think, why the courts of New York hold that this system lacks no element of due process. *390
No State, under the guise of regulating fares and tariffs, may require a utility company to perform its services without appropriate reward (Railroad Commission Cases,
By affirming the orders below in the present suit, we are holding that our customary certiorari proceedings under article 78 of the Civil Practice Act somehow fail to meet the tests outlined above. Wherein are they deficient? The ultimate determination of the validity of commission-established utility rates is now, as it always has been, in the courts. In this State certiorari as a traditional and accepted method of reviewing the action of inferior bodies or officers is older than the Fourteenth Amendment, and older than the State itself (People exrel. Republican Journal Co. v. Lazansky,
To bring our list of New York decisions down to date, we point to Matter of Rumsey (
In Coler v. Corn Exchange Bank (
As we understand the majority's position, it is that due process requires a plenary equity suit to try plaintiff's allegation of confiscation, but that no new testimony need be taken, and that the equity court may try the issue on the proof already taken by the commission. It must be clear: first, that plaintiff seeks no such proceeding and does not want new findings on the evidence already heard but demands a real de novo trial, and, second, that, while a new determination on the commission record may satisfy concepts of due process, it finds no authorization or precedent in any procedural statute, rule or decision in this State. After this plenary equity suit has gone to trial and Special Term has weighed for itself the commission testimony, the party aggrieved by the Special Term decision will, we assume, have a right of appeal to the Appellate Division. On such an appeal the weight of the evidence will again be open. That will make three separate, independent weighings, *394
by one commission and two courts, of the identical testimony, each tribunal having exactly the same function and power, but each overruling the one ahead of it. And, if the Appellate Division makes new findings, this court will for a fourth time pass on the weight of evidence. All this is in supposed obedience to instructions from the Supreme Court, which court not only has indicated in at least three recent decisions that no such new trials are necessary but has said in the Schechter case (
The Public Service Commission was set up in this State forty years ago. The commission has been investigating and fixing utility rates ever since. The scope of its work and the number and kind of services regulated by it have been gradually increased by the Legislature. The commission now has several hundred officers and employees and an annual budget of about two million dollars. It regulates about thirty-five hundred separate corporations and has conducted thousands of investigations and hearings, a large percentage of them having a direct or indirect effect on rates. Rate reductions running into vast sums have been ordered and put into effect. Now a way has been found to take away pretty much all finality from the commission's rate-making function. We make no prediction as to the size and force of the impact of this present decision on the whole carefully built and strengthened system of protecting the interests of the people of this State. The decision, it cannot be denied, upsets a workable and working system. It authorizes an additional cumbersome and elaborate method of court review when there is neither practical nor theoretical need therefor. And, based as it is on a construction of the Federal Constitution, our ruling will be beyond the power of the State Legislature to correct.
In Administrative Justice and The Supremacy of Law by Dickinson, published in 1927, this was said as to authorizing the courts to make new findings in these cases: "It is like permitting the court to substitute its conclusion in place of the jury's as to whether the plaintiff in a negligence action did or did not see an approaching vehicle. If the court's `independent' *395 judgment on such a point is to prevail, there would be little use in having a jury. The argument applies with greater force to the finding of a commission, reached in a separate proceeding at much trouble and expense to both the public and the parties. The double process only reduplicates the uncertainty of any particular case and brings it out at the end of the administrative stage of the proceedings with nothing settled which is not liable to be overruled. After the administrative tribunal has spoken, the whole case would still be as open, and the nature of the ultimate decision as uncertain, as if no proceedings had yet been had. Such a hazard is not one which either the community or the utility companies ought fairly to be called upon to bear." (P. 202.)
The order appealed from should be reversed and the complaint dismissed, with costs in all courts. Both certified questions should be answered in the negative.
LEWIS, CONWAY and DYE, JJ., concur with THACHER, J.; DESMOND, J., dissents in opinion in which LOUGHRAN, Ch. J., and FULD, J., concur.
Order affirmed, etc.