Supplemental Brief — United Gas Co. v. Texas

INDEX.

i conden judicial review accorded Company by

F Oourt of Civil -Apmeale .....ccccccccccccccccccs

- $700,000 rate base referred to by Court of Civil Appeals

was historical cost found by Commission, not

Elrod’s reproduction cost new estimate..........

‘Estoppel of Company to urge claimed ‘‘non-recurring”’

} ||| rr rrrrrrrrrrrrrrryv rrr rrrer rrr ry oe

Retroactive refunas, not violative of due process clause

» General Office General Expense, Prorated ........ hes

" Operating — items as important as rate base

(WEED 5 0 6 coccccddeccceesscowsnsavessts SL milewe

CASES CITED.

~ B.& O. R. Co. v. United States, 298 U. S. 349, 80 L. Ed.

SE MMs sob 0.00:60060.06h6tbinesasaneeensNidewiites

~ Centra] Kentucky -Co. v. Commission, 290 U. S. 264, 78

Sy Wy Ms GE 0.60.6560550.0806500566648 0606 tp eebiess

State of Texas v. Lone Star Gas Co., 86 S. W. (2d) 494

» United Gas Public Service Co. v. State of Texas, 89

S. &.W. (2d) WOM seers eeeeeeeeee te eeeeeee

| Lindheimer v. Ill. Bell Tel. Co., 292 U. S. 151, 78 L. Ba

Me BIOS nc vc ccnccccccceccivecacccccccesceth cs:

. St. Joseph. Stock Yards Co. v. United States, 298 U. S.

B86 60 L. Ed. 1088 ...,..,.ccccccccccccecccceess

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| | IN THE

Supreme Court of the United States

OctoBErR TERM; 1937. .-

Unirep Gas Pustic Szzvice Company, Appellant, -

v.

Tue State or TExas, EF AL, Appellees.

» eaEnnE EEE

Appeal from the Court of Civil Appeals for the Third

Supreme Judicial District, of Texas, at Austin.

: APPELLEES’ SUPPLEMENTAL BRIEF.

V. . (See pp. 18, 44-47, Appellees’ Original Brief).

VI. (See pp. 19, 44-47, Appellees’ Original Brief). _

VII: (See pp. 19-20, 44-47, Appellees’ Original Brief). —

Appellant argues that the Court of Civil Appeals has

denied it the independent judicial review, as to the facts,

claimed by it to be required by due process; and that such .

Court has placed upon the Company an impossible burden,

ignored and refused to consider its evidence, foreclosed ‘its

mind against the Company in advance, and accepted un-

questioningly all evidence of Appellees. As evidence of

‘opinion. (R. I, 410-428, 89 8. W. (2d) 1094).-

2

these claimg Appellant lies the opinion of the ——_ of

Civil Appeals.

We also invite this Court’s most careful scrutiny me § 2 that

k the

Court especially to note how often, in the opinion, the Court

of Civil Appeals specifically adverts to, dis¢usseés, analy

_and reviews, Appellant’s evidence and contentions. R: 7,

414; 415, 416, 417, 420, 421, 422, 423, 425. y

That the Court of Civil Appeals did exercise its inde-

pendent judicial judgment as to the facts in this case is also

perfectly clear from the circumstance that the Court (R. I,

423-424) cited its own previous discussion and holding, as

to the scope of judicial review, in State of Texas v. Lone

Star Gas Company, 86 S. W. (2d) 494, 498-500; where it

specifically pointed out and discussed at length the clear dis-

tinction between the type of judicial review required in the

-ease of orders not involving claimed confiscation and those

involving such question; and where it is expressly held that

in the case of claimed confiscation the court is required, in

view of the Ben Avon Borough case and others, to accord

the complaining party a de novo or independent judicial, re-

view as to the facts as well as the law. _ This it thefi_pro-

ceeded to do in the present | case.

XXVI- A, ‘‘Rate Base In General”: (See PP- 87-92, Ap-

pellees’ Oyiginal Brief) : ae

Appellant also points out that the Court of Civil Appeals

adopted, as the rate base in some of its computations, the

sum of $700,000 instead of the $885,000 fair value found by

_ the Commission ; “and from this circumstance alone-the Com-

pany jumps to the conelusion—absolutely unwarranted by

anything appearing either in the court’s opinion or in the

entire reeord—that this $700,000 represents, in round num-

bers, the. depreciated reproduction. cost new estimate of

$698,047 of the Commission’s witness Elrod (R. I, 330). as

of December 31, 1933, before. the District Court, which ex-

eluded the Pescadito-Jennings transmission line and the

west Jennings gathering system.

ss.

Si esiieeieprnconicestaseniectameretenie

-

~*~

: We point out that it is : perfectly plain that what the Court .

of Civil Appeals was referring to was, not the reproduction

cost new*estimate of Elrod, but the, statement as to his-

torical cost in the Commission’s opinion. At R. 1, 15, the’

Commigsion said: | e

‘*In addition, the City adduced ‘evidence showing the

depreciated historical cost of the properties as of July

31, 1932, to be $709,991.23.”"

This amount, of course, was approximated by the Com-

mission from a study of the City’s historical cost exhibit

| (R. I, 1374-A) coverng the whole of the properties*in the

Laredo area.

The Court of Civil Appeals simply said (R. L, 414-415) :

‘‘There was also evidence before both the trial court

and the Commission, which tended to show the fair

value of appellant’s property to be about. $700,000... ””

and nothing whatever is said to indicate that it based this

figure upon Elrod’s estimate. On the contrary, the con-

. ¢lusion is inescapable that it referred to the Commission’s

historical cost estimate aforesaid; for the Court could not

have been referring to Elrod rs reproduction cost uew esti-

mate of $698,047—that estimate was not before the Com-

mission at all. The lowest reproduction cost new estimate

before:the Commission was Elr6d’s figure of $810,698 (R. d,

15, 208). The historical cost. exhibit (R. II, 1374-A) was

before both the Commission and District Court, and there- .

fore satisfied the essential requirements of the above-quoted

language of the Court of CivH-*tppeals; and, of course, the

Commission’s above-quoted estimate of $709, 991.23 as his-

torical cost was likewise before the reviewing court.

_ XXVI-D, 5. (See pp. 39-40, 108-110, Appellees’ -Original -

Brief) : B c

On the estoppel of the Company to urge the claimed loss

of the ‘‘non-recurring’’ revenues/from Central Power & —

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7

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80 L. Ed. 1209.

4

Light Co:, and Motor Fuel Products*Company, because of

its failure to point out.in any manner, before the Commis-

sion, the cldimed permanent loss of these accounts, although

such claimed losées were shown plainly to have been well

known to the Company long before ~~ Commission’s hear-~-

ings began:

The Company clatms (see its Supplemental Brief, pf¥i )

that the Commission could and should have known ‘ofthe

claimed permanent loss of these two aceounts, because the

- total decline in revenues, shown in Exhibit L (R. I, 218) was

plainly apparent to anyone examining it. It is true that

such exhibit, and the testimony generally, before the Com-

mission, did show a decline in total revenues over the four-

year, operating period presentéd by the City before ‘the

| Commission: But there was nothing, in the face of the said

exhibit itself or in the Commissior record otherwise, to put

the Commission upon notice, (or even upon suspicion), that

‘the decline in total revenues was in whole or in substantial

part due to any claimed permanent loss of these two par-

ticular large industrial accounts or any other accounts; and

in the condition of the record the Commission would natu-

rally have supposed that the decline was due simply to a

general falling off of business during the nissan and

was therefore only temporary. — oars te

On the distinction between introducing before the review- |

ing court evidence which has. newly developed, or been

newly discovered, since the close of the Commission record,

on the one hand, and evidence which, on the other hand,

was known to the complaining party prior to the Commis-

sion hearing, and not introduced by it at such hearing but’

deliberately withheld and introduced by it for the first time

in the reviewing court, see St. Joseph Stock Yards Co. v.

United States, 298 U. S. 38, 54, 80 L-Ed. 1033. And on

the impropriety of such conduct generally, see also concur-

ring opinion of Justices Brandeis, Stone, Roberts and Car-

dozo, in B. ¢ O. R. Co. v. United States, 298 U.S. 349, 392,

Ps

5

a - >

XIX, (See pp. 28, 63-66, Appellees’ Original Brief) :

Upon the question of refunds allegedly infringing. -

due process clause:

See Central Kentucky Co. v. Commission, 290 U. S. r 4

275, 78 L. Ed. 307, where this Court, on reversing because of |

the lower court’s unauthorized attempt to fix a new rate,

ordered accumulated refunds to be held’ in custody of an

agent of the Commission, for disposition by it on the ordered

rehearing, for a period of several years. This shows plainly

tf t (there is nothing ahout impounding and ordering of

past refunds. which is ‘incompatible with due process.

_ / XXVI-B, 8. ( sia pp. 36, 101-105, Appellees’ Original

Brief) :

_ Please ada to footnote 29, page 104, ‘of our original brief,

the case of Lindheimer v. Il. Bell Tel. Co., 292 U. S. 151,

169, 78 L. Ed. 1182, 1194. oe

XXVI-B, “Operating Expenses in General’’: (See: pp;

107-108, Anpellece? Original Brief) :

_ As pointed out by this Court in Lindheimer v. Ill. Bell

Tel. Co., 292 U. S. 151, 164, 78 L. Ed. 1182, 1191, the items

of questioned operating expense are especially important,

es because, dollar for dollar, they exercise a much greatér ef-

fect upon the rate stenotare than - property items entering

into the rate base.

en submitted, |

Wauurax McCraw,

| Attorney General of Texas,

komme M. Scort,

Sp. Assistant Attorney pe a

of Texas,

Epwarp H. Lanes, ~

City Attorney, City of. Laredo,

Attorneys for Appellees.