Petitioner and respondent are public utility electric companies
engaged in interstate commerce and subject to the Federal Power
Act. For ten years, while under the same management through
interlocking directorates and joint officers with the approval of
the Federal Power Commission, petitioner's predecessor and
respondent interchanged electric energy, shared expenses, and made
a number of intercompany contracts establishing rates and charges
which were filed with and accepted by the Commission. After
separation of their management, petitioner sued in a federal
district court to recoup losses alleged to have resulted from its
predecessor's paying respondent unreasonably high charges for what
respondent furnished it and receiving unreasonably low rates for
what it furnished respondent. It alleged that these rates and
charges were fraudulent and unlawful, and were due to the
interlocking directorates, which prevented protest to the
Commission to have reasonable rates and charges established
pursuant to the provisions of the Federal Power Act. There was no
diversity of citizenship of the parties, and federal jurisdiction
was asserted solely on the ground that the case arose under the
Federal Power Act.
Held:
1. Since the complaint asserted a cause of action under the
Federal Power Act, the District Court had jurisdiction to determine
whether it stated a cause of action maintainable in a federal court
and, if so, whether it was sustained on the facts. P.
341 U. S.
249.
2. The complaint stated no cause of action maintainable in a
federal court. Pp.
341 U. S.
249-255.
(a) Under the Federal Power Act, the right to a reasonable rate
is the right to the rate which the Commission files or fixes, and,
except for review of the Commission's orders, a court can assume no
right to a different rate on the ground that, in the opinion of the
court, such different rate is the only reasonable rate or a more
reasonable rate. Pp.
341 U. S.
250-252.
(b) In the absence of diversity of citizenship, the allegation
of fraud resulting from the interlocking relationship did not state
a cause of action maintainable in a federal court. Pp.
341 U. S.
252-253.
Page 341 U. S. 247
(c) Since the Federal Power Act does not authorize the
Commission to grant reparations for unreasonable rates collected in
the past, the District Court could not properly refer the case to
the Commission for determination of the reasonableness of the rates
here involved. Pp.
341 U. S.
253-254.
3. Since the case involves only issues which a federal court
cannot decide, and can only refer to a body which also would have
no independent jurisdiction to decide them, the complaint must be
dismissed. P.
341 U. S.
255.
181 F.2d 19 affirmed on a different ground.
In a suit alleged to be founded on the Federal Power Act, the
District Court awarded petitioner a judgment for losses sustained
on past rates and charges which the District Court found to be
unreasonable and based on fraud. The Court of Appeals reversed on
the ground that the District Court was without jurisdiction. 181
F.2d 19. This Court granted certiorari. 340 U.S. 806.
Affirmed
on a different ground, p.
341 U. S.
255.
MR. JUSTICE JACKSON delivered the opinion of the Court.
Petitioner and respondent are public electric utilities
companies engaged in interstate commerce. Petitioner's predecessor
and respondent were under the same management through interlocking
directorships and joint officers.
Page 341 U. S. 248
During that relationship, the two interchanged electric energy,
shared expenses, and made a number of intercompany contracts
establishing rates and charges, which contracts were filed with and
accepted by the Federal Power Commission. These contract rates and
charges are at the root of this controversy. Petitioner charges
that, during the period 1935-1945, its predecessor paid respondent
unreasonably high prices for what respondent furnished it, and that
it received unreasonably low rates for what it provided respondent.
That advantage, it is alleged, was fraudulent and unlawful, and was
due to the interlocking directorate, which prevented protest to the
Commission to have reasonable rates and charges established
pursuant to the provisions of the Federal Power Act. [
Footnote 1]
Petitioner sued in United States District Court and asserted
jurisdiction on the ground that the case "arises under the
Constitution, or laws of the United States," [
Footnote 2] and, more particularly, under a "law
regulating commerce," [
Footnote
3] specifically the Federal Power Act.
Petitioner was successful in the District Court, which found the
contracts void for fraud and the rates and charges established
therein unreasonable. The court also determined what would have
been reasonable rates and charges for the period in question, and
gave judgment for the difference between its conception of
reasonable charges and the actual charges, amounting to over
three-quarters of a million dollars. [
Footnote 4]
The judgment was reversed by the Court of Appeals for the Eighth
Circuit on the ground that the District Court was without
jurisdiction. [
Footnote 5]
Page 341 U. S. 249
As frequently happens where jurisdiction depends on subject
matter, the question whether jurisdiction exists has been confused
with the question whether the complaint states a cause of action.
The Judicial Code, in vesting jurisdiction in the District Courts,
does not create causes of action, but only confers jurisdiction to
adjudicate those arising from other sources which satisfy its
limiting provisions. Petitioner asserted a cause of action under
the Power Act. To determine whether that claim is well founded, the
District Court must take jurisdiction, whether its ultimate
resolution is to be in the affirmative or the negative. If the
complaint raises a federal question, the mere claim confers power
to decide that it has no merit, as well as to decide that it has.
In the words of Mr. Justice Holmes,
". . . if the plaintiff really makes a substantial claim under
an act of Congress, there is jurisdiction whether the claim
ultimately be held good or bad."
The Fair v. Kohler Die & Specialty Co.,
228 U. S. 22,
228 U. S. 25.
See also Hurn v. Oursler, 289 U.
S. 238,
289 U. S. 240.
Even a patently frivolous complaint might be sufficient to confer
power to make a final decision that it is of that nature, binding
as
res judicata on the parties.
Petitioner's complaint, in substance, alleges existence of the
interlocking directorship, contends that such relationship was used
fraudulently to deprive it of its federally conferred right to
reasonable rates and charges, and demands reparations. We think
there was power in the District Court to decide whether the claims
so grounded constitute a cause of action maintainable in federal
court, and, if so, whether it is sustained on the facts. We think a
direction to dismiss for want of jurisdiction was error, and that
it should not stand as a precedent.
However, it is clear that the reason underlying the Court of
Appeals' decision was that no federal cause of action was
established. If this was correct, we should sustain
Page 341 U. S. 250
the judgment of reversal, though on other grounds than those
stated.
The petitioner's problem is to avoid Scylla without being drawn
into Charybdis. If its cause of action arises from fraud and
deceit, it is a common law action of which a federal court has no
jurisdiction, there being no diversity in citizenship of these
parties. But if it arises from being charged rates in excess of
those permitted by the Power Act, it is confronted with the
exclusive powers of the Commission to determine what those rates
are to be. Hence, it is necessary to bring the case into court not
as a fraud action, but as one to enforce the Power Act, using the
allegations of fraud to escape the limitations of the Power
Commission remedies.
I
Petitioner identifies as the source of its cause of action the
Federal Power Act's requirement of reasonable electric utility
rates, [
Footnote 6] which, it
contends, creates its legal right to rates which a court may deem
reasonable, even if different from those accepted by the Federal
Power Commission. It is admitted, however, that a utility could not
institute a suit in a federal court to recover a portion of past
rates which it simply alleges were unreasonable. It would be out of
court for failure to exhaust administrative remedies, for, at any
time in the past, it could have applied for and secured a review
and, perhaps, a reduction of the rates by the Commission. [
Footnote 7]
Petitioner gives its case a different cast by alleging that, by
fraudulent abuse of the interlocking relationship,
Page 341 U. S. 251
its predecessor was deprived of its independence and power to
resort to its administrative remedy.
But the problem is whether it is open to the courts to determine
what the reasonable rates during the past should have been. The
petitioner, in contending that they are so empowered, and the
District Court, in undertaking to exercise that power, both regard
reasonableness as a justiciable legal right, rather than a
criterion for administrative application in determining a lawful
rate. Statutory reasonableness is an abstract quality represented
by an area, rather than a pinpoint. It allows a substantial spread
between what is unreasonable because too low and what is
unreasonable because too high. To reduce the abstract concept of
reasonableness to concrete expression in dollars and cents is the
function of the Commission. It is not the disembodied
"reasonableness," but that standard when embodied in a rate which
the Commission accepts or determines, that governs the rights of
buyer and seller. A court may think a different level more
reasonable. But the prescription of the statute is a standard for
the Commission to apply, and, independently of Commission action,
creates no right which courts may enforce.
Petitioner cannot separate what Congress has joined together. It
cannot litigate in a judicial forum its general right to a
reasonable rate, ignoring the qualification that it shall be made
specific only by exercise of the Commission's judgment, in which
there is some considerable element of discretion. It can claim no
rate as a legal right that is other than the filed rate, whether
fixed or merely accepted by the Commission, and not even a court
can authorize commerce in the commodity on other terms.
We hold that the right to a reasonable rate is the right to the
rate which the Commission files or fixes, and that,
Page 341 U. S. 252
except for review of the Commission's orders, the courts can
assume no right to a different one on the ground that, in its
opinion, it is the only or the more reasonable one.
II
The petitioner here contends that its case is different by
reason of its allegations of fraud. Those, the evidence that
supports them, and the findings are exceedingly general, and it is
not entirely clear whether, in addition to the claim that
constructive fraud may be inferred from the intercorporate
relationship, specific acts of deceit are found. Nor does it appear
to have been thought that the difference between constructive and
actual fraud mattered.
If the petitioner's grievance arises from active fraud and
deceit, it gains nothing from the Federal Act. Such an action would
have been maintainable if no Federal Power Act had been enacted.
Before the Act, petitioner would have had no statutory right to a
reasonable rate, but it did have a common law right not to be
defrauded into paying an excessive or unreasonable one. The Federal
Act adds nothing to fraud as an actionable wrong, and therefore to
find a cause of action of this character would only be to dismiss
it for want of diversity.
But petitioner's case appears to have rested more heavily, and
perhaps entirely, on constructive fraud presumed from the
intercorporate relationship. The Act vests in the Commission power
to authorize an interlocking directorate, which otherwise is
prohibited, "upon due showing . . . that neither public nor private
interests will be adversely affected thereby." [
Footnote 8] The relationship here concerned had
received Commission approval. The effect of the approval is to
exempt the relationship from the ban of the Act and remove from it
any presumption of fraud that might be thought to arise from its
mere
Page 341 U. S. 253
existence. It would be a strange contradiction between judicial
and administrative policies if a relationship which the Commission
has declared will not adversely affect public or private interests
were regarded by courts as enough to create a presumption of fraud.
Perhaps, in the absence of the Commission's approval, such
relationship would be sufficient to raise the presumption under
state law, but it cannot do so where the federal supervising
authority has expressly approved the arrangement.
We need not decide what action the Commission is empowered to
take if it believes that a fraud has been committed on itself, for
it has taken no action which gives rise to or affects this
controversy.
III
The entire Court is agreed that the judgment rendered by the
District Court cannot stand, and all agree that it cannot
adjudicate the issues that plaintiff tendered to it. We disagree
only as to the consequences of the disability. The majority believe
the federal court should dismiss the complaint. A minority urges
that we should direct the District Court to refer issues to the
Federal Power Commission.
It is true that, in some cases, the Court has directed lower
federal courts to stay their hands pending reference to an
administrative body of a subsidiary question.
Smith v. Hoboken
R. Co., 328 U. S. 123;
Thompson v. Texas Mexican R. Co., 328 U.
S. 134;
General American Tank Car Corp. v. El Dorado
Terminal Co., 308 U. S. 422.
But, in all those cases, the plaintiff below concededly stated a
federally cognizable cause of action, to which the referred issue
was subsidiary. In no instance have we directed a court to retain a
case in which it could not determine a single one of its vital
issues. Here, the issue of reasonableness of the charges is not one
clearly severable from the issues of liability, for the acts
charged do not amount to
Page 341 U. S. 254
fraud unless there has been an unreasonable charge. Injury is an
essential element of remediable fraud. "Deceit and injury must
concur."
Adams v. Clark, 239 N.Y. 403, 410, 146 N.E. 642,
644 (1925).
See also Connelly v. Bartlett, 1924, 286 Mass.
311, 315, 190 N.E. 799, 801.
If the court is presented with a case it can decide, but some
issue is within the competence of an administrative body, in an
independent proceeding, to decide, comity and avoidance of conflict
as well as other considerations make it proper to refer that issue.
But we know of no case where the court has ordered reference of an
issue which the administrative body would not itself have
jurisdiction to determine in a proceeding for that purpose. The
fact that the Congress withheld from the Commission power to grant
reparations [
Footnote 9] does
not require courts to entertain proceedings they cannot themselves
decide in order indirectly to obtain Commission action which
Congress did not allow to be taken directly. There is no indication
in the Power Act that that was Congress' intent.
It is urged that this leaves petitioner without a remedy under
the Power Act. We agree. In that respect, petitioner is no worse
off after losing its lawsuit than its customers are if it wins.
Unless we are to assume that this company failed to include its
buying costs in its selling rates, we must assume that any
unreasonable amounts it paid suppliers it collected from consumers.
Indeed, this is the assumption made by the Commission in its brief
as
amicus curiae here. [
Footnote 10] It is admitted that, if it recoups again
what it has already recouped from the public, there is no machinery
in or out of court by which others who have paid unreasonable
charges to it can recover. [
Footnote 11]
Page 341 U. S. 255
Under such circumstances, we conclude that, since the case
involves only issues which a federal court cannot decide and can
only refer to a body which also would have no independent
jurisdiction to decide, it must decline the case forthrightly,
rather than resort to such improvisation.
The judgment below is affirmed upon the ground that the
petitioner has not established a cause of action.
It is so ordered.
[
Footnote 1]
41 Stat. 1063, 49 Stat. 838, 62 Stat. 275, 16 U.S.C. §§
791a-825r.
[
Footnote 2]
28 U.S.C. § 1331.
[
Footnote 3]
28 U.S.C. § 1337.
[
Footnote 4]
Not reported.
[
Footnote 5]
181 F.2d 19.
[
Footnote 6]
Section 205(a) of the Act, 49 Stat. 851, 16 U.S.C. § 824d(a),
states that:
"All rates and charges . . . and all rules and regulations
affecting or pertaining to such rates or charges shall be just and
reasonable, and any such rate or charge that is not just and
reasonable is hereby declared to be unlawful."
[
Footnote 7]
§ 206(a), 49 Stat. 852, 16 U.S.C. § 824e(a).
[
Footnote 8]
§ 305, 49 Stat. 856, 16 U.S.C. § 825d(b).
[
Footnote 9]
S.Rep.No.621, 74th Cong., 1st Sess. 20.
[
Footnote 10]
Brief for the Federal Power Commission as
amicus
curiae, pp. 13-14.
[
Footnote 11]
Id. pp. 14-17.
MR. JUSTICE FRANKFURTER, joined by MR. JUSTICE BLACK, MR.
JUSTICE REED, and MR. JUSTICE DOUGLAS, dissenting.
The plaintiff, Montana-Dakota Utilities Company, petitioner
here, is the successor in interest to several utility companies
which distributed electric energy in North and South Dakota. The
defendant, Northwestern Public Service Company, served the region
to the south of Montana-Dakota's territory. Both corporations have
been subject to the Federal Power Act since its enactment in 1935.
49 Stat. 847, 16 U.S.C. § 824
et seq. The controversy
arises out of relations between the two enterprises prior to 1945.
The facts which raise the question whether the Federal District
Court had jurisdiction to entertain the suit may be briefly
summarized.
After January 1, 1935, all but one of Montana-Dakota's directors
were directors of Northwestern, and all of Montana-Dakota's
officers were officers of the other company. These interlocking
arrangements received formal authorization by the Federal Power
Commission, as required by § 305(b) of the Act. 16 U.S.C. §
825d(b). At different times between 1935 and 1945, contracts were
made between the two corporations for the sale of electric energy.
All such agreements have to be filed with the Commission, § 205(c),
16 U.S.C. § 824d(c), but the legality of rates so filed is not
conditioned upon the Commission's
Page 341 U. S. 256
approval. Unless they are challenged, either by an interested
party or on the Commission's initiative, the filed rates become the
legal rates. Montana-Dakota now claims, in essence, that, for a
decade, Northwestern, by virtue of its control, deprived
Montana-Dakota of the rights which that corporation enjoyed under
the Federal Power Act and prevented it from contemporaneously
asserting them before the Federal Power Commission. Montana-Dakota
was prevented from filing what would have been the lawful rates
because Northwestern, as the dominus of Montana-Dakota, filed rates
for that company that were less than the reasonable rates to be
exacted under the Federal Power Act -- rates which would have been
determined by arm's length dealing between the two companies.
Having secured freedom of action and thereby the power to assert
its rights, Montana-Dakota brought this suit in the United States
District Court for the District of South Dakota to recoup the
losses which it claims were thus imposed on it.
The defendant moved to dismiss the complaint for want of
jurisdiction in that it failed to state a claim under federal law.
The motion was denied, 73 F. Supp. 149, and the case went to trial.
The District Court found unfair dealing in the circumstances of the
interlocking relationship and resulting unreasonableness in the
rates, and gave judgment for the plaintiff in the sum of
$779,958.30, principal and interest.
The Court of Appeals for the Eighth Circuit reversed. It held
that the Federal Power Commission "had jurisdiction and was the
proper tribunal in the first instance" to determine the
reasonableness of the rates and the bearing of fraud practiced on
the Commission in securing permission for the interlocking
arrangements and the resulting subversion of rights under the
Federal Power Act. The court found that "The Commission can, no
doubt, correct its own mistakes," but it did not specify
Page 341 U. S. 257
the administrative remedies it deemed available. It concluded
that the District Court was without power to entertain the
complaint, and ordered it dismissed. 181 F.2d 19, 23. We brought
the case here, since important issues in the administration of the
Federal Power Act are at stake. 340 U.S. 806.
Section 317 of the Federal Power Act, in its present form,
confers on the district courts of the United States
"exclusive jurisdiction of violations of this Act or the rules,
regulations, and orders thereunder, and of all suits in equity and
actions at law brought to enforce any liability or duty created by,
or to enjoin any violation of, this Act or any rule, regulation, or
order thereunder."
49 Stat. 862, 16 U.S.C. § 825p. There can be no doubt,
therefore, that, if the complaint, fairly construed in light of the
successful determination of the issues, seeks to enforce a duty
which the Federal Power Act recognizes, the District Court properly
entertained the suit under the jurisdictional provisions of the
Act, reinforcing as they do the general jurisdictional provisions
governing the district courts.
See Act of March 3, 1911, §
24(1), (8), 36 Stat. 1091, 1092, 28 U.S.C. §§ 1331, 1337.
The Federal Power Act directs that
"All rates and charges made, demanded, or received by any public
utility for or in connection with the transmission or sale of
electric energy subject to the jurisdiction of the Commission, and
all rules and regulations affecting or pertaining to such rates or
charges shall be just and reasonable, and any such rate or charge
that is not just and reasonable is hereby declared to be
unlawful."
§ 205(a), 49 Stat. 851, 16 U.S.C. § 824d(a). We face at the
outset the contention that this section confers on the Federal
Power Commission authority to award reparations for unreasonable
rates collected in the
Page 341 U. S. 258
past. Federal railroad rate legislation gave such a power to the
Interstate Commerce Commission. Act of Feb. 4, 1887, §§ 9, 16, 24
Stat. 382, 384-385, as amended, 49 U.S.C. §§ 9, 16(1);
cf.
Act of Aug. 15, 1921, § 308, 42 Stat. 165, 7 U.S.C. § 209. But it
was not given to the Federal Power Commission. It was withheld
deliberately.
See S.Rep. No. 621, 74th Cong., 1st Sess.
20. Wholesale consumers of electric energy were apparently
considered, as a rule, adequately protected by the provisions of
the Act authorizing the Commission to grant prospective relief and,
in certain circumstances, to order refunding of sums accumulated
during the pendency of rate proceedings. §§ 205(e), 206(a), 49
Stat. 852, 16 U.S.C. §§ 824d(e), 824e(a). Despite the unqualified
statutory declaration that unreasonable rates are unlawful, we
think it clear that Congress did not intend either court or
Commission to have the power to award reparations on the ground
that a properly filed rate or charge has in fact, been unreasonably
high or low. If that were all the complaint before us showed, we
would agree that recovery of damages in a civil action would not be
an appropriate remedy, and that the complaint should have been
dismissed.
But the case before us is very different. Montana-Dakota does
not assert merely that the rates fixed and filed for it by the
defendant were unreasonable. Montana-Dakota claimed, and introduced
evidence to show, that some contracts required by the Act to be
filed were not filed at all; that others were filed months late,
and that some were not the
bona fide contracts obtained by
arm's length negotiation that, on their face they appeared to be,
but instead were
"conceived and put into operation by the defendant and its
aforesaid directors and officers for the purpose of exacting large
charges from [Montana-Dakota] for the purpose, among other things,
of offsetting charges of [Montana-Dakota] for electrical energy
generated
Page 341 U. S. 259
in North Dakota and transmitted to and sold to defendant for
resale in South Dakota."
See cause 3, V of the complaint. Thus, the complaint in
substance alleges that Northwestern misled the Commission into
approving schedules which would not have been approved had
Northwestern complied with the obligations of full and fair
disclosure imposed on it by the Federal Power Act. While the
complaint does not artistically allege that domination by
Northwestern prevented Montana-Dakota from complaining to the
Commission that the rates and charges were unreasonable, that is
its plain import, and the facts were so found at the trial.
We are not here concerned with the complaint insofar as it sets
forth a common law cause of action based on misuse of powers by the
directors of a controlled corporation. Such an action, by itself,
of course, cannot be brought in a federal court in the absence of
diversity of citizenship between the parties. But this does not
preclude the same circumstances from giving rise to a cause of
action that has its roots in the Federal Power Act. As such, the
controversy does fall within the jurisdiction of a federal court.
The essence of this cause of action is that the Federal Power Act
imposed on Northwestern the duty to charge and pay reasonable rates
in its transactions with Montana-Dakota, and that, while under the
Act rates appropriately filed are, when unchallenged, the legal
rates and deemed to be reasonable, in the circumstances here
alleged, the schedules and contracts filed were not complete or
timely or
bona fide. Since it was coercively controlled,
Montana-Dakota could neither file rates that were truly reasonable
nor protest unreasonable rates filed on its behalf.
The Court of Appeals apparently closed the door of the District
Court to this suit on the assumption that relief could be had from
the Federal Power Commission for the damage flowing from violation
of the Federal Power Act. Of course, a court would not grant
relief, at least in the
Page 341 U. S. 260
first instance, if an adequate administrative remedy were
available. It is fundamental to federal regulatory legislation
that
"no one is entitled to judicial relief for a supposed or
threatened injury until the prescribed administrative remedy has
been exhausted."
Myers v. Bethlehem Shipbuilding Corp., 303 U. S.
41,
303 U. S. 50-51.
This principle is particularly relevant to rate regulation.
Texas & Pac. R. Co. v. Abilene Cotton Oil Co.,
204 U. S. 426;
Mitchell Coal & Coke Co. v. Pennsylvania R. Co.,
230 U. S. 247;
Armour & Co. v. Alton R. Co., 312 U.
S. 195.
Compare Great Northern R. Co. v. Merchants
Elevator Co., 259 U. S. 285.
But we do not find that the Federal Power Act provides
administrative remedies to meet the situation before us. We have
seen that that Act does not authorize the Commission to award
reparations to those subjected to unreasonable rates. The Act
likewise does not afford to the Commission the authority conferred
on administrative agencies under other regulatory statutes to award
damages to those injured by violations of the Act.
Compare
Act of February 4, 1887, § 9, 24 Stat. 382, 49 U.S.C. § 9; Act of
August 15, 1921, § 309(e), 42 Stat. 166, 7 U.S.C. § 210(e). The
Power Act, it is true, does give the Commission authority to look
into past rates in order to determine whether the Act has been
violated. § 307(a), 49 Stat. 856, 16 U.S.C. § 825f(a).
See
Atlantic Coast Line R. Co. v. Florida, 295 U.
S. 301,
295 U. S. 312.
But such an inquiry cannot be made the basis for an administrative
award of damages to the victims of the violations. Again, the
Commission may, as the Government suggests, have power under the
omnibus provisions of § 309 to vacate its approval of a rate when
approval has been obtained by fraud. 49 Stat. 858, 16 U.S.C. §
825h. But this does not authorize the Commission to fix rate orders
retrospectively. The Commission may establish rates only
Page 341 U. S. 261
"to be thereafter observed and in force." § 206(a), 49 Stat.
852, 16 U.S.C. § 824e(a).
If the Commission can neither fix rates retrospectively nor
award damages, it clearly can afford no adequate remedy to
Montana-Dakota. Vacating its acquiescence in the interlocking
directorate or in the schedules filed by Northwestern might prevent
Northwestern from asserting the approval of the federal agency in
an action brought against it under State law, but it would not
provide a basis for recovery by the injured party or impose any
certain liability on the wrongdoer. We are bound to conclude that
the Court of Appeals was in error in thinking that an adequate
administrative remedy existed and precluded courts from granting
relief.
But we cannot agree that the inability of the Federal Power
Commission to grant relief requires that courts be similarly
disabled. Courts, unlike administrative agencies, are organs with
historic antecedents which bring with them well defined powers.
They do not require explicit statutory authorization for familiar
remedies to enforce statutory obligations.
Texas & N.O. R.
Co. v. Brotherhood of Clerks, 281 U.
S. 548;
Virginian R. Co. v. System Federation,,
300 U. S. 515;
Deckert v. Independence Shares Corp., 311 U.
S. 282. A duty declared by Congress does not evaporate
for want of a formulated sanction. When Congress has "left the
matter at large for judicial determination," our function is to
decide what remedies are appropriate in the light of the statutory
language and purpose and of the traditional modes by which courts
compel performance of legal obligations.
See Board of Comm'rs
v. United States, 308 U. S. 343,
308 U. S. 351.
If civil liability is appropriate to effectuate the purposes of a
statute, courts are not denied this traditional remedy because it
is not specifically authorized.
Texas & Pac. R. Co. v.
Rigsby, 241 U. S. 33;
Steele v. Louisville & N. R. Co., 323 U.
S. 192;
Tunstall v. Brotherhood of
Locomotive
Page 341 U. S. 262
Firemen and Enginemen, 323 U.
S. 210;
cf. De Lima v. Bidwell, 182 U. S.
1.
That civil liability is an appropriate remedy in the situation
before us is attested alike by the words of the statute, by the
force of familiar principles of liability, and by practical
considerations in carrying out legislative objectives.
The Power Act is explicit that any "rate or charge that is not
just and reasonable is hereby declared to be unlawful." § 205(a),
49 Stat. 851, 16 U.S.C. § 824d(a). The aim of Congress would be
needlessly aborted if this "definite statutory prohibition of
conduct" did not impose civil liability in a situation not covered
by administrative remedies merely because no judicial relief was
explicitly authorized.
Compare Texas & N.O. R. Co. v.
Brotherhood of Clerks, supra, at
281 U. S. 568.
The right of civil recovery by persons compelled to pay
unreasonable or discriminatory rates to common carriers is one of
the oldest forms of relief in our law.
Western Union Tel. Co.
v. Call Publishing Co., 181 U. S. 92. To
enforce a remedy for collection of unreasonable charges in the
situation before us, therefore, would recognize deeply rooted law;
to deny it would be inconsistent with long established judicial
practice. The experience of the Commission indicates that the
statute itself, by virtue of the positive duties it commands, under
normal circumstances is very largely its own sanction. [
Footnote 2/1] Want of explicitness in
providing a familiar remedy for the rare case of disobedience
should not be construed a denial of it.
Page 341 U. S. 263
To leave relief to the diverse and conflicting State law dealing
with intercorporate relations would make for conflicting local
administration of an important national problem. This Court has
recently shown marked reluctance to leave to the States
determination of even State law questions involved in the
administration of the Federal Power Act.
First Iowa
Hydro-Electric Cooperative v. Federal Power Commission,
328 U. S. 152.
What is involved here -- the frustration, by misuse of the
machinery of the Federal Power Act, of the command of Congress that
rates be reasonable -- has a federal character and significance. We
do not think it likely that Congress intended that there should be
no relief for this kind of tampering with the federal regulatory
scheme other than that which might be afforded by the corporation
law of the forty-eight States.
We could attribute such a purpose to Congress only if to allow
civil relief in the situation before us would interfere with the
administrative remedies contemplated under the Act, or impose on
courts alien responsibilities or duties they are not equipped to
fulfill. No such consequence is remotely involved in utilizing this
age-old remedy. The statute is based on the assumption that
unlawful rates will ordinarily be promptly corrected at the
initiative of injured parties permitted to resort to the Commission
for prospective relief. § 306, 49 Stat. 856, 16 U.S.C. § 825e. That
procedure is not available when the wrong asserted is that the
defendant corporation has established unlawful schedules by
fraudulent domination of the utility with which it transacts
business. To grant judicial relief for such a wrong will not
interfere with the remedial procedure to which the Act confines
corporations which are their own masters.
Nor will it transfer to the courts responsibility for deciding
questions which should properly be presented to the Power
Commission. In a variety of situations we have
Page 341 U. S. 264
recently emphasized the principle that courts and agencies "are
to be deemed collaborative instrumentalities of justice."
United States v. Morgan, 313 U. S. 409,
313 U. S. 422,
307 U. S. 307 U.S.
183;
Palmer v. Massachusetts, 308 U. S.
79. To that end, it is established practice that courts
may entertain actions brought before them, but call to their aid
the appropriate administrative agency on questions within its
administrative competence.
See Smith v. Hoboken R. Co.,
328 U. S. 123;
Thompson v. Texas Mexican R. Co., 328 U.
S. 134;
cf. United States Alkali Export Assn. v.
United States, 325 U. S. 196,
325 U. S. 210.
In the
El Dorado Oil Works litigation, we held that proper
procedure required the District Court to entertain a suit on a
contract, but to look to the Interstate Commerce Commission for
guidance as to transportation practices involved in carrying out
the contract.
General American Tank Car Corp. v. El Dorado
Terminal Co., 308 U. S. 422,
308 U. S. 433;
El Dorado Oil Works v. United States, 328 U. S.
12. The fact that the Federal Power Commission is not
itself authorized to award damages does not disable it from
advising a court on questions on which its judgment is needed.
See United States v. Morgan, supra; Atlantic Coast Line R. Co.
v. Florida, supra, at
295 U. S. 312. We see no reason why the Commission's
findings should not be sought here.
We think, therefore, that a cause of action within the
jurisdiction of the district courts is stated by a complaint
charging a distributor of electric energy at wholesale in
interstate commerce (1) with buying or selling at unreasonable
rates, (2) with failure to comply with procedural requirements of
the Federal Power Act, and (3) with preventing others from
resorting to the remedies afforded by that Act. In such cases, the
district court should stay proceedings and request determination by
the Federal Power Commission of matters within the Commission's
special competence. It is within the Commission's domain to rule
whether filed rates should not,
Page 341 U. S. 265
in view of all relevant circumstances, be considered
"reasonable" rates. It also falls to the Commission to decide what
would have been the reasonable rates. The opinion of the
Commission, being "only a preliminary, interim step" towards final
judgment, would not be a reviewable order under § 313(b) of the
Act, but would be reviewed only as a part of the judgment entered
by the district court.
Federal Power Comm'n v. Hope Natural Gas
Co., 320 U. S. 591,
320 U. S.
618-619.
The objections raised to this procedure have apparently not been
considered substantial by the Federal Power Commission, the body
primarily charged with administration of the Act. [
Footnote 2/2] We do not think they should prevail.
The function of the District Court is not simply to serve as a
facade behind which the Commission is enabled to accomplish
indirectly what it cannot do directly. Certain issues of fact --
the completeness of disclosure, for instance, or the loyalties of
the directors -- are properly for the court. Action by the court
may similarly be required in determining the appropriate
disposition of the fund.
See Federal Power Comm'n v. Interstate
Natural Gas Co., 336 U. S. 577;
Interstate Natural Gas Co. v. Federal Power Comm'n, 181
F.2d 833. Recovery by Montana-Dakota need not be a windfall to that
company. Many changes in costs charged utilities are not reflected
in prices they may collect.
Compare St. Louis & O'Fallon R.
Co. v. United States, 279 U. S. 461,
279 U. S. 488,
279 U. S.
505-509 (Mr. Justice Brandeis, dissenting). To the
extent that Montana-Dakota has passed on its loss to its customers,
they may be permitted recovery from it on well established
principles of unjust enrichment. And even if the effect of awarding
relief is ultimately to benefit Montana-Dakota, it certainly has a
better claim to the exacted funds than Northwestern.
Page 341 U. S. 266
The procedure here outlined is not unlike that which the Court
employed in
United States v. Morgan, supra, where a
similar demand was made on the resourcefulness of law to find a
remedy to meet an unusual situation. Such a remedy not only defeats
unjust enrichment as between private parties. This is accomplished
in the public interest of effectuating the Federal Power Act.
Because we conclude that the District Court, while correct in
refusing to dismiss the complaint, should have asked the Federal
Power Commission to determine matters peculiarly within its
competence and report its finding to that court, we think the case
should be remanded to that court for further proceedings not
inconsistent with this opinion. We do not, of course, intimate any
opinion as to the sufficiency of the evidence to support the
conclusion that the filed rates in this case should not be deemed
lawful. Nor would we restrict any appropriate use the Commission
might wish to make of evidence adduced at the trial.
[
Footnote 2/1]
Data supplied by the Commission show that rate reductions
proposed by utilities invariably become effective as filed. More
that half of the rate increases likewise become effective
automatically as filed. Those which are suspended by the Commission
are, as a general rule, withdrawn, modified, or approved after
informal conferences between the parties and the Commission's
staff.
[
Footnote 2/2]
In its brief here the Commission urged adoption of substantially
the ground set forth in this opinion.