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06/16/87 the Illinois Commerce v. the Illinois Commerce

June 16, 1987

SUPREME COURT OF ILLINOIS INDEPENDENT VOTERS OF ILLINOIS, APPELLANT

v.

THE ILLINOIS COMMERCE COMMISSION ET AL. (ILLINOIS BELL TELEPHONE COMPANY, APPELLEE)



510 N.E.2d 850, 117 Ill. 2d 90, 109 Ill. Dec. 782 1987.IL.819

Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Kane County, the Hon. Paul W. Schnake, Judge, presiding

APPELLATE Judges:

JUSTICE WARD delivered the opinion of the court. JUSTICE GOLDENHERSH took no part in the consideration or decision of this case.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WARD

This appeal concerns utility rates which were originally set by order of the Illinois Commerce Commission in 1971. On an appeal involving the rates this court held that the Commission had improperly allowed certain expenses and deductions to the Illinois Bell Telephone Company (hereafter Bell) (Illinois Bell Telephone Co. v. Illinois Commerce Com. (1973), 55 Ill. 2d 461), and the matter was remanded for further proceedings. On remand, the Independent Voters of Illinois (hereafter the IVI), an intervenor, petitioned that all "overcharges" received by Bell under the invalid portions of the rate order be refunded to the utility's customers. The Commission ruled against the IVI, which appealed to the circuit court of Kane County. The circuit court's affirmance of the Commission's order was affirmed by the appellate court (139 Ill. App. 3d 957), and we allowed the IVI's petition for leave to appeal. 103 Ill. 2d R. 315.

In the first appeal, this court held that the Commission in its 1971 rate order had improperly allowed certain costs of Bell as operating expenses. (Illinois Bell Telephone Co. v. Illinois Commerce Com. (1973), 55 Ill. 2d 461, 486.) While that appeal was pending, Bell initiated a second proceeding before the Commission, seeking another, that is, an additional, general rate increase. The Commission, following the guidelines of permissible expenses set by this court on the original appeal, approved the second request for a rate increase. The first rate order was in effect during the litigation, including the appeal regarding it, and that rate order remained in effect until the second rate order became effective January 1, 1974. The Commission reopened proceedings in March 1975 upon remand of the first rate order, and at that time the IVI asked the Commission to refund to Bell customers the amounts paid under the 1971 rate order that this court had held to have been improper. The IVI sought restitution for two periods: (1) from the time that the 1971 rate order took effect on August 11, 1972, through this court's reversal of the order on October 1, 1973; (2) alternatively, from the time of this court's reversal decision, October 1, 1973, to the time the Commission's second rate order became effective on January 1, 1974. The Commission rejected the IVI's argument for restitution, as did the circuit and appellate courts. Briefs amici curiae were filed by the Office of Public Counsel (hereafter Public Counsel), which supports the IVI's arguments in part, and the Citizens Utility Board (hereafter CUB), a nonprofit public group, which also supports a portion of the IVI's position.

We first address the IVI's contention that Bell customers should receive restitution for the time that the rate order was in effect, from August 11, 1972, to October 1, 1973, the time of this court's previous decision. Bell, according to the IVI, should be required to "disgorge" the rate amounts overpaid by its customers under the portions of the Commission's order this court held to be invalid. The IVI contends that the reparations remedy provided in section 72 of the Public Utilities Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 76) (the Act) does not preclude restitution of rates paid under a Commission order that was later judicially reversed. Section 72 provides that the Commission, after a hearing at which it has found that a public utility has charged an excessive or unjustly discriminatory amount for its product, commodity or service, may order the utility to make statutory reparation to the complainant. (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 76.) The IVI contends that restitution is a post-appeal remedy that should be

This appeal is brought under section 68 of the Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 72). Under the statute the review of Commission findings is limited to questions of whether the Commission acted within the scope of its authority, whether the finding is without any reasonable foundation in the evidence, or whether a constitutional right has been infringed by such findings. (Citizens Utilities Co. v. Illinois Commerce Com. (1971), 50 Ill. 2d 35, 39; Village of Apple River v. Illinois Commerce Com. (1960), 18 Ill. 2d 518, 522-25; Chicago Junction Ry. Co. v. Illinois Commerce Com. (1952), 412 Ill. 579, 585; see also Ill. Rev. Stat. 1985, ch. 111 2/3, par. 10-201(e)(iv).) Section 68 of the Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 72) states that the Commission's findings and Conclusions on questions of fact shall be held prima facie to be true and the Commission's order or decision shall not be set aside "unless it clearly appears that the finding of the Commission was against the manifest weight of the evidence presented to or before the Commission" on the question. Ill. Rev. Stat. 1971, ch. 111 2/3, par. 72; see also Village of Apple River v. Illinois Commerce Com. (1960), 18 Ill. 2d 518, 523; United Cities Gas Co. v. Illinois Commerce Com. (1971), 48 Ill. 2d 36, 40; Illinois Commerce Com. ex rel. Lumaghi Coal Co. v. Chicago & Eastern Illinois Ry. Co. (1928), 332 Ill. 243, 249.

The Commission contends the IVI has waived its right for restitution because it failed to raise the issue in its petition for rehearing before the Commission. Section 67 of the Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 71) prohibits appeals upon grounds not raised in the application for rehearing. A review of the record shows the IVI did raise the question of restitution in its petition for rehearing in stating that it was "not simply requesting 'reparations'," but was also seeking refunds of amounts overpaid. We Judge that the IVI sufficiently articulated its claim for restitution in the petition to preserve it for appeal, and we now consider the merits of the IVI's argument that Bell customers are entitled to the amounts they paid under the portions of the 1971 rate order that were held improper by this court in the previous appeal.

The appellate court, relying on Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill. 2d 205, held that restitution is not an available remedy to recover the invalid portion of the rates paid under the 1971 rate order. Mandel Brothers, in the appellate court's view, made clear that the common law right to recover reparations for unreasonable charges by a public utility has been superseded by section 72 of the Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 76). We agree that section 72 would have been the proper remedy under the circumstances for securing refunds by utility customers. Section 72 specifies that the Commission may award reparations when a utility has charged an excessive or unjustly discriminatory amount for its product or service. Mandel Brothers specifically determined that public utility rates that have been approved by the Commission, after a finding that they are just and reasonable, cannot be deemed "excessive" for the purposes of awarding reparations, even if that rate order is set aside upon judicial review. (Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill. 2d 205, 209; see also Barry v. Commonwealth Edison Co. (1940), 374 Ill. 473, 477; Anzinger v. Illinois State Medical Inter-Insurance Exchange (1986), 144 Ill. App. 3d 719, 723-24.) Mandel Brothers held that a Commission-approved rate cannot be held to be excessive within the meaning of section 72 because such a determination would contradict the scheme of the Act and, in particular, section 71 (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 75). Section 71 specifically addresses the question of the rate to be charged during the pendency of an appeal. Section 71 provides that "[t]he pendency of an appeal shall not of itself stay or suspend the operation of the rule, regulation, order or decision of the Commission, but during the pendency of the appeal the circuit court, or the Supreme Court, . . . in its discretion may stay or suspend, in whole or in part, the operation of the Commission's . . . order . . .." We reaffirm the Mandel Brothers holding that it would contradict the statute for this court to conclude that a Commission-approved rate order, which is later reversed by a reviewing court, is excessive within the meaning of section 72. The Act requires utility companies to charge only those rates that are on file with the Commission and in effect at the time (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 37), and that are just and reasonable (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 32). Bell was required to collect the rates approved in the Commission's 1971 order because the Commission had set the rate, after a hearing as to its reasonableness, and the IVI did not seek to stay or suspend the operation of the order. Section 71 establishes that the rate order is effective during the pendency of an appeal, unless a stay or suspension of the order, in part or whole, is obtained. The IVI does raise challenges to the stay provision, which we will address later.

The IVI argues that Mandel Brothers is not applicable here because that case dealt with a reparations claim, while this appeal involves the duty of the Commission to rectify its errors on remand by granting restitution. Alternatively, the IVI says that if the Commission does not have the power to order restitution, then this court should exercise its equitable powers to order restitution. The Commission and Bell argue, and the appellate court held, that the Commission is prohibited from granting restitution because reparations under section 72 is the only statutory remedy. The Commission also says that, since this appeal is brought under section 68 of the Act (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 72), this court is limited to the statutory scope of review. It says that reviewing courts do not exercise equitable powers in review of Commission orders, and thus restitution cannot be ordered here. Whether the administrative remedies of the Act preclude the Commission or this court from granting restitution for the period before the rate order was judicially reversed need not be resolved, as restitution is not called for under the circumstances. Restitution is an equitable remedy that is sought before a court, and the basis of such liability is unjust enrichment to the defendant. (G. Palmer, Restitution, sec. 1.1, at 2 (1978).) Restitution is compelled against one who has obtained money or property without authority and usually where an adequate legal remedy does not exist for the aggrieved party. (G. Palmer, Restitution, sec. 1.6, at 35 (1978).) This court has already determined that a Commission-approved rate order cannot be deemed excessive for reparations purposes if the Commission found it reasonable and just, although it is later set aside by a reviewing court, because section 71 provides that the order shall remain in effect during the pendency of an appeal, unless it is stayed or suspended. Bell, as a public utility, was prohibited from charging more or less than the rates set by the Commission (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 37) and was statutorily required to follow the 1971 rates set by the Commission. Since Bell was required by statute to collect the new rates, which were found just and reasonable by the Commission, Bell has received no unlawful charges of which it should be "disgorged" under restitutional principles.

The IVI also argues that if Mandel Brothers forbids refunds to Bell customers in this situation, it should be overruled. The IVI acknowledges that Mandel Brothers concluded that a party must have obtained a stay or suspension, in whole or in part, to avoid payments under rates that were approved by the Commission. The legislature, the IVI argues, could not have intended stay orders to be the only method

available to avoid the permanent effects of rate orders that are later judicially reversed. Since our decision in Mandel Brothers, the legislature has amended the Act (Ill. Rev. Stat. 1985, ch. 111 2/3, par. 1-101 et seq., eff. Jan. 1, 1986). The Act's stay provisions were amended so that a bond shall not be required in the case of any stay or suspension granted on application of the State, represented by the Attorney General or Public Counsel (Ill. Rev. Stat. 1985, ch. 111 2/3, par. 10-204). The legislature did not amend the Act to change this court's construction in Mandel Brothers that the Act prohibits refunds of amounts overpaid by utility customers during the pendency of an appeal, unless the rate order had been stayed or suspended. Too, the legislature has twice declined to enact proposals that would have allowed the Commission to adjust temporarily rates to provide the public utility with the increased or decreased revenue it would have received during the pendency of an appeal if the final order as originally promulgated by the Commission had been in accord with the opinion of the highest court to which the appeal was taken. (H.B. 1173, 80th Ill. Gen. Assem., 1977-78; H.B. 2059, 81st Ill. Gen. Assem., 1979-80.) Either of these legislative proposals would, if enacted, have amended the Act differently from the construction given by this court in Mandel Brothers. The legislature's reenactment of a statute, which has been judicially construed, should be viewed as an adoption of that particular construction. (2A Sutherland, Statutory Construction sec. 49.10, at 408 (1984 rev. ed.); see also Union Electric Co. v. Illinois Commerce Com. (1979), 77 Ill. 2d 364, 380.) "The construction this court has placed upon the Act has in effect become a part of the Act, and a change in the construction by this court would amount to amending the statute. The power to accomplish this does not lie in the courts." Union Electric Co. v. Illinois Commerce Com. (1979), 77 Ill. 2d 364, 381.

The IVI, amicus CUB, and amicus Public Counsel claim that the stay provision of the Act is unconstitutional because no customer or group can reasonably be expected to furnish a bond that would be sufficient to make the utility whole in the event that the stay is eventually reversed. The IVI says it was not financially able to post a bond pursuant to section 71 of the Act to stay the Commission's order and, therefore, was not able to avail itself of the remedies under the Act. CUB and Public Counsel contend that the appellate court's decision raises constitutional questions under the due process clause of the fourteenth amendment of the United States Constitution and article I, section 2, of the Constitution of Illinois. CUB also contends that the General Assembly cannot constitutionally deprive the courts of providing a remedy under these circumstances. CUB, however, concedes that this court need not address the constitutional issue as there is no provision in the Act purporting to take away equitable jurisdiction. The Commission and Bell say that the IVI waived this argument because it had not sought a stay of the original rate order and also because it had not raised the constitutionality issue before the Commission or in its petition for rehearing as required by section 68 (Ill. Rev. Stat. 1971, ch. 111 2/3, par. 72). The IVI did, in one of its memoranda before the Commission, question the constitutionality of section 71 as violative of the fifth and fourteenth amendments, but ...


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