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KELLER v. POTOMAC ELECTRIC POWER CO., 261 U.S. 428 (1923)

U.S. Supreme Court

KELLER v. POTOMAC ELECTRIC POWER CO., 261 U.S. 428 (1923)

261 U.S. 428

KELLER et al., Public Utilities Commission of District of Columbia,
v.
POTOMAC ELECTRIC POWER CO., Inc., et al.
No. 260.

Argued Feb. 26, 27, 1923.
Decided April 9, 1923.

[261 U.S. 428, 429]   Messrs. Frank H. Stephens, of Chicago, Ill., and Conrad H. Syme, of Washington, D. C., for appellant.

[261 U.S. 428, 431]   Mr. John A. Garver, of New York City, for appellee.

[261 U.S. 428, 436]  

Mr. Chief Justice TAFT delivered the opinion of the Court.

This is an appeal from the Court of Appeals of the District of Columbia. It is an appeal provided for in paragraph 64 of the law creating the Public Utilities Commission of the District. The law is section 8 of an act approved March 4, 1913, making appropriations for the District for the year ending June 30, 1914 (37 Stat. 938, 974). Paragraph 7 requires the commission created thereby to value the property of every public utility within the District actually used and useful for the convenience of the public at the fair value thereof at the [261 U.S. 428, 437]   time of the valuation. The commission, after a public hearing, fixed the value of the Potomac Electric Power Company at $11,231,170.43. The company then filed a bill in equity in the Supreme Court of the District against the commission, seeking to enjoin the order as unlawful, unreasonable and inadequate under paragraph 64 of the law. It made a party defendant to the bill the Washington Railway & Electric Company, because it is the sole stockholder of the Power Company.

The Supreme Court of the District upheld the findings of the commission in every particular and dismissed the bill. From this decree the company appealed to the Court of Appeals of the District, on the ground that the commission and the Supreme Court had found the value as of July 1, 1914, whereas the time of the valuation was December 31, 1916, and between the two dates there had been a sharp rise in values, for which the company was not made any allowance in the valuation, and also because under the circumstances of the case, and the challenge by the company that the valuation was arbitrary, the court should disregard the prima facie effect given by the statute to the findings of the commission, and exercise its own independent judgment as to both law and facts, so far as it was necessary to determine whether the use of such valuation as a basis of rate making would result in confiscation. The Court of Appeals sustained the appeal on these grounds, and remanded the cause for further proceedings not inconsistent with its opinion.

When this appeal was opened by counsel at the bar we declined to hear the merits, and postponed the case to give both sides an opportunity to prepare to discuss the questions, first whether Congress had the constitutional power to vest the District Courts and this court with jurisdiction to review the proceedings of the commission, and, second, whether if the power existed, the appeal to this court was only intended to apply to a final decree, [261 U.S. 428, 438]   and finally whether this was such a decree. Briefs have accordingly b en filed and we have had an oral argument upon these questions.

The Public Utilities Law is a very comprehensive one. It applies to all public utilities in the District, except steam rilways and steamboat lines. It creates a commission to supervise and regulate them in the matter of rates, tolls, charges, service, joint rates, and other matters of interest to the public. It directs investigation into the financial history and affairs of each utility and its valuation at a fair value as of the time of valuation. It requires a public hearing on this subject. It also provides that while the utility may fix a schedule of rates, not exceeding the lawful rates at the passage of the act, which it must publish, the commission may of its own initiative, or upon the complaint of another, or indeed of the utility itself, investigate the reasonableness, lawfulness, and adequacy of the rate or service and may change the same. The utility must then adopt the change and publish its schedules accordingly. The law further provides that, in such proceedings, the utility shall have notice and a hearing, that a stenographic record of the proceedings shall be kept and produced by the commission in any court proceeding thereafter instituted to question the validity, reasonableness, or adequacy of the action of the commission.

The relevant part of paragraph 64 is given in full in the margin. 1 In short, it enables the commission by action [261 U.S. 428, 439]   in equity to invoke the advice of the District Supreme Court upon the elements in value to be by it considered in arriving at a true valuation of the property of a utility. It further grants to any utility or any person or corporate interest dessatisfied with any valuation, rate or rates, or regulation, or requirement, act, service, or other thing fixed by the commission the right to begin a proceeding in equity in the Supreme Court, to vacate, set aside, or modify the order on the ground that the valuation, rate, regulation, or requirement is unlawful, inadequate, or unreasonable. Paragraph 65 limits the time within which such a proceeding to vacate, set aside, or amend the order of [261 U.S. 428, 440]   the commission may be begun to 120 days, and thereafter the right to appeal or of recourse to the courts shall terminate absolutely. Paragraph 67 provides that, if new evidence is introduced by the plaintiff different from that offered in the hearing before the commission, unless the parties otherwise agree, the new evidence shall be sent to the commission to enable it to change its order if it sees fit, and then the court shall proceed to consider the appeal either on the original order or the changed order as the case may be. Paragraph 69 provides that in such proceedings the burden of proof is upon the party adverse to the commission to show by clear and satisfactory evidence that the determination, requirement, direction, or order of the commission complained of is inadequate, unreasonable, or unlawful as the case may be.

What is the nature of the power thus conferred on the District Supreme Court. Is it judicial or is it legislative? Is the court to pass solely on questions of law, and look to the facts only to decide what are the questions of law really arising, or to consider whether there was any showing of facts before the commission upon which, as a matter of law, its finding can be justified? Or has it the power, in this equitable proceeding, to review the exercise of discretion by the commission and itself raise or lower valuations, rates, or restrict or expand orders as to service? Has it the power to make the order the commission should have made? If it has, then the court is to exercise legislative power, in that it will be laying down new rules, to change present conditions and to guide future action, and is not confined to definition and protection of existing rights. In Prentis v. Atlantic Coast Line, 211 U.S. 210, 226 , 29 S. Sup. Ct. 67, 69 (53 L. Ed. 150) we said:

Under the law, the proceeding in the District Supreme Court is of a very special character. The court may by called in to advise the commission as to the elements of value to be by it considered, at any stage of the hearing before the commission. To modify of amend a valuation, or a rate, or a regulation of the commission as inadequate, as the court is authorized to do, seems to us necessarily to import the power to increase the valuation, or rate, or to make a regulation more comprehensive, and to consider the evidence before it for this purpose. In other words, the proceeding in court is an appeal from the action of the commission in the chancery sense. In the briefs of counsel for the commission it is so termed. The form which the bill filed is given by the electric company is that of a series of exceptions to the rulings of the court on the evidence and at every stage of the hearing and finally to the conclusions of fact as against the weight of the evidence. Paragraph 69 is significant in its indication that issues of fact as to inadequacy of the action by the commission are to be passed on by the court.

Counsel seek to establish an analogy between the jurisdiction of the District Supreme Court to review the action of the commission, and that conferred on, and exercised by, the federal District Courts in respect of the orders of the Interstate Commerce Commission. We think, however, that the analogy fails. The act for the creation of the Commerce Court provided ( Judicial Code, 207 [Comp. St. 993]) that is should have the jurisdiction of the then Circuit Courts of all cases brought to enjoin, set aside or annul or suspend in whole or in part any order of the commission. When the Commerce Court was abolished by the [261 U.S. 428, 442]   Act of October 22, 1913 (38 Stat. 219 [Comp. St. 992]), this jurisdiction was conferred on the several District Courts of the United States. This permits these courts to consider all relevant questions of contitutional power or right and all pertinent questions whether the administrative order is within the statutory authority, or is an attempted exercise or it so unreasonable as not to be within it; but these are questions of law only. Interstate Commerce Commission v. Illinois Central R. R. Co., 215 U.S. 452, 470 , 30 S. Sup. Ct. 155. Of course the consideration and decision of questions of law may involve a consideration of controverted facts to determine what the question of law is, but it is settled that any finding of fact by the commission, if supported by evidence, is final and conclusive on the courts. Interstate Commerce Commission v. Union Pacific R. R., 222 U.S. 541, 547 , 32 S. Sup. Ct. 108. A similar distinction exists between the jurisdiction here conferred and that vested in circuit courts of appeals in reference to proceedings before the Trade Commission. Act Sept. 26, 1914, c. 311, 5, 38 Stat. 719 (Comp. St. 8836e). The language of the act under discussion is much wider than that of the Interstate Commerce Act or of the Federal Trade Commission provisions. It brings the court much more intimately into the legislative machinery for fixing rates than does the Interstate Commerce Act. We cannot escape the conclusion that Congress intended that the court shall revise the legislative discretion of the commission by considering the evidence and full record of the case and entering the order it deems the commission ought to have made.

Can the Congress vest such jurisdiction in the courts of the District of Columbia? By the Constitution (clause 17, section 8, article 1) Congress is giv n power 'to exercise exclusive legislation in all cases whatsoever, over' the District of Columbia. This means that as to the District Congress possesses, not only the power which belongs to it in respect of territory within a state, but the power of [261 U.S. 428, 443]   the state as well. In other words, it possesses a dual authority over the District, and may clothe the courts of the District, not only with the jurisdiction and powers of federal courts in the several states, but with such authority as a state may confer on her courts. Kendall v. United States, 12 Pet. 524, 619. Instances in which congressional enactments have been sustained which conferred powers and placed duties on the courts of the District of an exceptional and advisory character are found in Butterworth v. Hoe, 112 U.S. 50, 60 , 5 S. Sup. Ct. 25, United States v. Duell, 172 U.S. 576 , 19 Sup. Ct. 286, and Baldwin Co. v. R. S. Howard Co., 256 U.S. 35 , 41 Sup. Ct. 405. Subject to the guaranties of personal liberty in the amendments and in the original Constitution, Congress has as much power to vest courts of the District with a variety of jurisdiction and powers as a state Legislature has in conferring jurisdiction on its courts. In Prentis v. Atlantic Coast Line, supra, we held that, when 'a state Constitution sees fit to unite legislative and judicial powers in a single hand, there is nothing to hinder so far as the Constitution of the United States is concerned.' 211 U.S. 225 , 29 Sup. Ct. 67, 69 (53 L. Ed. 150); Dreyer v. Illinois, 187 U.S. 71, 83 , 84 S., 23 Sup. Ct. 28.

It follows that the provisions in the law for a review of the Commission's proceedings by the Supreme Court of the District and for an appeal to the District Court of Appeals are valid. A different question arises, however, when we come to consider the validity of the provision for appeal to this court. It is contained in the following sentence in paragraph 64:

The court proceedings to review the orders of the commission authorized by paragraph 64 are expressly required [261 U.S. 428, 444]   to conform to equity procedure. In that procedure, an appeal brings up the whole record and the appellate court is authorized to review the evidence and make such order or decree as the court of first instance ought to have made, giving proper weight to the findings on disputed issues of fact which should be accorded to a tribunal which heard the witnesses. This court is therefore given jurisdiction to review the entire record, and to make the order or decree which the commission and the District Courts should have made.

Such legislative or administrative jurisdiction, it is well settled cannot be conferred on this court either directly or by appeal. The latest and fullest authority upon this point is to be found in the opinion of Mr. Justice Day, speaking for the court in Muskrat v. United States, 219 U.S. 346 , 31 Sup. Ct. 250. The principle there recognized and enforced on reason and authority is that the jurisdiction of this court and of the inferior courts of the United States ordained and established by Congress under and by virtue of the third article of the Constitution is limited to cases and controversies in such form that the judicial power is capable of acting on them and does not extend to an issue of constitutional law framed by Congress for the purpose of invoking the advice of this court without real parties or a real case, or to administrative or legislative issues or controversies. Hayburn's Case, 2 Dall. 410, note (1 L. Ed. 436); United States v. Ferreira, 13 How. 40, 52; Ex parte Siebold, 100 U.S. 371 , 398; Gordon v. United States, 117 U.S. 697 , appen ix; Baltimore & Ohio R. R. Co. v. Interstate Commerce Commission, 215 U.S. 216 , 30 Sup. Ct. 86.

The fact that the appeal to this court is invalid does not, however, render paragraph 64 invalid as a whole. Paragraph 92 of the law declares each paragraph to be independent and directs that the holding of any paragraph or any part of it invalid shall not affect the validity of the rest. Moreover, we think Congress would have [261 U.S. 428, 445]   given the appeals to the courts of the District, even if it had known that the appeal to this court could not stand.

Some question has been made as to the validity of paragraph 65, which forbids all recourse to courts to set aside, vacate and amend the orders of the commission after 120 days, and of paragraph 69, which puts the burden upon the party adverse to the commission to show by clear and satisfactory evidence the inadequacy, unreasonableness, or unlawfulness of the order complained of. It is suggested that this deprives the public utility of its constitutional right to have the independent judgment of a court on the question of the confiscatory character of an order, and so brings the whole law within the inhibition of the case of Ohio Valley Water Co. v. Ben Avon Borough, 253 U.S. 287 , 40 Sup. Ct. 527. It is enough to say that, even if paragraphs 65 and 69 were invalid, the whole act would not fail, in view of paragraph 92 already referred to. It will be time enough to consider the validity of those sections, when it is sought to apply them to bar or limit an independent judicial proceeding raising the question whether a rate or other requirement of the commission is confiscatory. Our conclusion that the provision for appeal to this court in paragraph 64 is invalid makes it unnecessary to decide whether the appeal must be from a final decree, or whether the decree of the Court of Appeals was final.

Appeal dismissed.

Footnotes

[ Footnote 1 ] 'Par. 64. That if at any time the commission shall be in doubt of the elements of value to be by them considered in arriving at the true valuation under the provisions of this section, they are authorized and impowered to institute a proceeding in equity in the Supreme Court of the District of Columbia petitioning said court to instruct them as to the element or elements of value to be by them considered as aforesaid, and the particular utility under valuation at the time shall be made party defendant in said action.

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