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Natural Gas Pipeline Co. v. Federal Power Commission

May 22, 1942


Petition by the Natural Gas Pipeline Company of America and another against the Federal Power Commission and another for review of an order of the named respondent, wherein the petitioners filed application requesting the court to reserve jurisdiction to determine amount payable under bonds filed as result of stay order and persons entitled thereto and wherein Marshall Joyce and others filed a cross-petition.

Author: Lindley

Before EVANS and SPARKS, Circuit Judges, and LINDLEY, District Judge.

LINDLEY, District Judge.

The original petitioners seek further exercise of the jurisdiction of this court in determination and distribution of the amounts payable by them, pursuant to and by virtue of the terms of the stay order entered and the bounds filed in the original proceeding and in restraint of suits in other forums.

On August 30, 1940, this court restrained temporarily, enforcement of the Federal Power Commission's rate order of July 23, 1940, upon condition that petitioners file a bound in the sum of $1,000,000, conditioned as provided in the order. In November following, the court, under Section 19(c) of the Natural Gas Act, 15 U.S.C.A. § 717r(c) entered an order staying the rate, dissolving the earlier temporary restraining order, and requiring, as a condition of the stay, a bound for $1,000,000, in favor of the Federal Power Commission and the Illinois Commerce Commission conditioned for payment of the amounts representing the reduction in gross revenues of petitioners which might accrue pending review of the order of the Commission directing petitioners to file new schedules of rates and changes effectuating reduction of not less than $3,750,000 per annum in the operating revenue of petitioners. At that time petitioners represented to the court that they were amply solvent and could and would respond to any final judgment against them.

This court, upon final hearing, set aside the order of the Commission, 7 Cir., 120 F.2d 625. Subsequently the Supreme Court reversed that Judgment, 62 S. Ct. 736, 86 L. Ed. . Since then, petitioners have filed with the Commission new rte schedules in conformity with the latter's original order which, by virtue of the decision of the Supreme Court, became effective as of the date of its entry. Petitioners have filed also copies of the schedules disclosing the amounts representing the reduction in rates which would have been made to their customers had the stay not been entered and had the scheduled rates been effective from the date of original order of the Commission July 23, 1940.

In their present petition, petitioners set forth the foregoing facts and aver that they are ready, able and willing to refund such amounts as we may deem properly payable as a result of the erroneous entry of the stay. They aver that this court has "exclusive jurisdiction, authority and obligation to regulate, control and direct the disposition of any funds payable because of the order staying the order of the Power Commission"; that, notwithstanding such sole jurisdiction, they have been sued both in the state and federal courts by ultimate consumers of the gas distributed and that unless we retain jurisdiction, they will be subjected to numerous similar suits. They pray that the court reserve jurisdiction to determine all amounts payable by them under the terms of the bonds filed or as a result of the stay order, to the persons entitled to receive such payments, and the amount due each and that all persons claiming any right to such payments be enjoined from asserting their demands in any court other than this.

The Illinois Commerce Commission in its answer avers that the gas distributed passed eventually to ultimate consumers, approximately one million in number; that the rates charged by the distributing companies to their customers are fixed by the Illinois Commerce Commission largely upon and necessarily reflect the prices paid by the distributing companies to petitioners or their affiliate, the Chicago District Pipe Line Company; that the money represented by the excess charges was collected from the comsumers and, eventually and inevitably, is equitably due them; that this court has exclusive original jurisdiction of the determination of legality of the Federal Commission's order and the consequent exclusive ancillary jurisdiction of distribution of all such money as has accrued because of the stay in favor of the persons ultimately and equitably entitled thereto, and that all persons claiming any interest in such funds should be permitted and directed to come into the ancillary proceedings. It prays that the court retain jurisdiction for the purpose of making distribution, grant leave to the respondent to file proper pleading and restrain prosecution of all other actions.

The distributing companies, who purchase gas from petitioners and the latters' affiliate and who sell gas to the public, agree that the refund should eventually, equitably and ultimately be made to the consumers who purchased from them. They contend that this court had exclusive jurisdiction of the original proceedings and has equally exclusive jurisdiction of the necessary ancillary proceedings to control, provide for and direct distribution of the refunds. Indeed the positions of petitioners, the Federal Power Commission, the Illinois Commerce Commission and the distributing companies are in substantial accord.

Marshall Joyce and others, claiming to be consumers, file a pleading which we shall designate a cross-petition. They neither admit nor deny the jurisdiction of this court but aver that our authority, if any, is of such character that we are under no compulsion to exercise it and that whether we should do so should be determined by our sound discretion "on the basis of the balance of convenience to both the court and parties and the comparative adequacy of remedy and relief available both on trial and on appeal." They have filed in the District Court a class suit in behalf of themselves and all other customers seeking recovery of excess charges, determination of the respective amounts due customers, distribution thereof, and restraint against all parties from proceeding in other courts. They have filed a similar action in the state court. They aver in each of their complaints that the excess charges constitute "a trust fund for the use and benefit of the gas consumers" and "money had and received to the use of the consumers" and insist that said sums shall be paid only to such persons.

Thus all parties before the court agree that the excess charges when distributed should in equity be refunded to the ultimate consumers. The question immediately confronting us is whether this court has jurisdiction and if so whether we should or must retain it and restrain other litigation or, whether our power to act is discretionary and the parties should be remanded to relief in other forums.

The source and boundaries of our authority must be found in the Natural Gas Act, 15 U.S.C.A. § 717r(b)(c), providing that persons aggrieved by an order of the Commission may obtain a review in the proper Circuit Court of appeals, which shall have exclusive jurisdiction to affirm, modify or set aside the order in whole or in part, and the judgment of which shall be final, subject only to review by the Supreme Court. Proceeding for review does not, unless so specifically ordered by the court, operate as a stay of the Commission's order. Thus the Circuit Court of Appeals is the first forum in which a judicial hearing can be had to determine the legality of the order. In this respect the legislation is similar in its terms and purport to that governing orders of the Federal Trade Commission, the National Labor Relations Board and various other administrative bodies. We have previously said in Century Metalcraft Corporation v. Federal Trade Commission, 7 Cir., 112 F.2d 443, that, under the Federal Trade Commission Act, 15 U.S.C.A. § 41 et seq., Congress has made a grant of original jurisdiction to the court to enforce, set aside or modify the Commission's order and that such power carries with it authority to vacate or modify our own judgment whenever good cause is shown. This is in accord with announcements of other jurisdictions. We think it well settled that in respect to review of orders of Federal Boards and commissions, the jurisdiction of the Circuit Court of Appeals, when granted by Congress, is original rather than appellate in character and that, being endowed with original jurisdiction, the court may by its own orders protect the rights of the parties in any manner in which any trial court of equity of general jurisdiction might do so in an injunction suit. Butterick Co. v. Federal Trade Commission, 2 Cir., 4 F.2d 910; Silver Co. v. Federal Trade Commission, 6 Cir., 292 F. 752; Chamber of Commerce v. Federal Trade Commission, 8 Cir., 13 F.2d 673; Federal Trade Commission v. Balme, 2 Cir., 23 F.2d 615, certiorari denied 277 U.S. 598, 48 S. Ct. 560, 72 L. Ed. 1007; Indiana Quartered Oak Co. v. Federal Trade Commission, 2 Cir.,58 F.2d 182.

We are accustomed to thinking of the District Court as the only federal judicial tribunal of original jurisdiction, but we know of no constitutional prohibition against a grant by the Congress of original jurisdiction to the Circuit Court of Appeals. We are not concerned with the reason why Congress has in some instances vested in the District Court original jurisdiction to review orders of administrative bodies and why in others it has lodged such power in the Court of Appeals. The essential fact is that it has seen fit so to do. The rank of the court is not important. Federal Trade Comm. v. Balme, 2 Cir., 23 F.2d 615.

Having original jurisdiction, what is the nature of and the true limitation upon that jurisdiction? Is its exercise discretionary upon the part of this court or are we confronted with a duty? In considering this, we should remember the distinction between ancillary or incidental jurisdiction and that which is original. Where a court has jurisdiction of a cause of action and the parties, it has jurisdiction also of supplemental proceedings which are a continuation of or incidental to and ancillary to the former suit even though the court as a federal tribunal might not have had jurisdiction of the parties involved in the ancillary proceeding if it were an original action. In other words, inasmuch as such jurisdiction ...

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