Montana Power Co. v. Public Service Commission

671 P.2d 604, 206 Mont. 359, 1983 Mont. LEXIS 833
CourtMontana Supreme Court
DecidedOctober 27, 1983
Docket82-340
StatusPublished
Cited by23 cases

This text of 671 P.2d 604 (Montana Power Co. v. Public Service Commission) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Montana Power Co. v. Public Service Commission, 671 P.2d 604, 206 Mont. 359, 1983 Mont. LEXIS 833 (Mo. 1983).

Opinions

MR. JUSTICE WEBER

delivered the opinion of the Court.

Montana Power Company (Montana Power) appeals from an order of the District Court of the First Judicial District, Lewis and Clark County. The District Court order denied Montana Power’s application for a writ of prohibition and affirmed in part an order of the Public Service Commission (Commission), which prohibited Montana Power from proceeding with a proposed corporate reorganization. We re[362]*362verse the order of the District Court.

The issues presented on appeal are:

1. Can the Commission act summarily without notice or hearing in prohibiting Montana Power from proceeding with the establishment of a holding company while the Commission investigates the proposed reorganization?

2. Does the Commission have the power to prohibit establishment of a holding company by Montana Power during the investigation by the Commission?

3. Does the Commission have subject matter jurisdiction to approve or disapprove the proposed reorganization?

Montana Power has proposed the formation of a new corporation, Montana Energy Company, and the reorganization of Montana Power to be accomplished by a reverse triangular merger. Upon completion of the merger, Montana Energy Company would become the sole shareholder of the common stock of Montana Power. The common shareholders of Montana Power would become shareholders of Montana Energy Company through a share-for-share exchange. Following merger, Montana Power would become a direct subsidiary of Montana Energy Company.

On February 23, 1982, the Board of Directors of Montana Power voted to present the reorganization plan to the shareholders at the annual meeting in May. On the following day, February 24, 1982, Montana Power explained the proposed reorganization to the Commission and advised the Commission that shareholder approval would be sought on May 4, 1982.

On March 1,1982, the Commission instituted an investigation of the reorganization plan and issued an order prohibiting Montana Power from implementing the plan until the investigation was completed. The order provided:

“1. The Commission staff shall hold a prehearing conference at a time and place to be previously noticed to the public through legal advertisements.
“2. The staff shall, at the prehearing conference review with interested persons, the issues set out in this order. In[363]*363terested persons may propose additions or deletions to those issues, as well as suggest procedures to be followed in this Docket.
“3. The Commission staff shall propose to the Commission, following the prehearing conference, the procedures to be followed and any issues not set out in this Order to be considered in this Docket.
“4. The Commission staff shall schedule and notice a public hearing to allow this Commission to take testimony and receive public comments concerning issues raised in this Docket.
“5. The Montana Power Company is prohibited from taking any further steps in preparing for or advancing the establishment of a holding company except for those actions that might be necessary to address the issues raised in this Docket, such as preparation of testimony.
“6. A copy of this order shall be mailed to the Montana Power Company, the Montana Consumer Counsel and all intervening parties in Docket Nos. 80.4.2 and 81.6.57.” (emphasis added)

The Commission issued this order without notice or hearing, and without any opportunity for appearance by Montana Power. No deadline was specified for the completion of the investigation. No termination date was prescribed for the order prohibiting action by Montana Power.

Following its unsuccessful attempt to invoke the jurisdiction of this Court, Montana Power filed a complaint in District Court on April 19, 1982, seeking a writ of prohibition or injunction on the grounds that the Commission’s stay order was issued absent subject matter jurisdiction and absent power to enjoin. The District Court issued a preliminary order allowing the shareholder vote on the reorganization plan. However, the court enjoined implementation of the plan until “ten (10) days after entry of an appropriate judgment.” The shareholders voted and approved the reorganization plan at the May 1982 shareholders’ meeting.

[364]*364The Commission refused to participate at the subsequent show cause hearing. Commission counsel chose not to present evidence or to cross-examine the three Montana Power witnesses, who testified as to the possible effects of the proposed reorganization. The Commission explained to the District Court that it refused to participate because the question of the Commission’s subject matter jurisdiction over the proposed reorganization was still pending before the Commission. The Commission also argued that testimony was not required because the issues raised by Montana Power involved questions of law to be resolved by statutory interpretation. As a result, the evidence submitted for consideration by the District Court and this Court is limited to the uncontradicted testimony of the witnesses for Montana Power.

Can the Commission act summarily without notice or hearing in prohibiting Montana Power from proceeding with the establishment of a holding company while the Commission investigates the proposed reorganization?

The Montana Constitution guarantees equal protection of the laws and due process to all persons. Mont. Const, art II, §§ 4 & 17. All persons found within the State of Montana are subject to the jurisdiction of the courts; and corporations are included in the definition of “person.” Rules 4A & 4B(1), Mont.R.Civ.P. “A corporation is a ‘person’ within the due process and equal protection clauses of the Fourteenth Amendment to the U. S. Constitution.” Mt. States, Etc. v. Dept. of Pub. Serv. Reg. (Mont.1981), 634 P.2d 181, 188, 38 St.Rep. 1479, 1487.

The power to act summarily by issuing an order prohibiting action by a utility without a hearing is a drastic power to be implied only where required for the protection of the public. As noted by James 0. Freedman, Professor of Law, University of Pennsylvania:

“. . . The power to act summarily is a drastic and sensi[365]*365tive one, akin to the injunctive power of a court; it is granted to agencies, usually those having the confidence of the legislature, only for the performance of a limited number of tasks. Given the political process by which administrative agencies are brought to birth and the drastic nature of the power to act summarily, it is justifiable to assume that a legislature’s failure to delegate summary authority was not inadvertent. Whatever arguments can be made in favor of implying the existence in an agency of particular powers not expressly or precisely delegated, they are not appropriate to the power to act summarily.
“Moreover, any assertion of authority to act summarily potentially presents questions of constitutional dimension, particularly with respect to the limitations summary action may impose in the right to a hearing.

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Bluebook (online)
671 P.2d 604, 206 Mont. 359, 1983 Mont. LEXIS 833, Counsel Stack Legal Research, https://law.counselstack.com/opinion/montana-power-co-v-public-service-commission-mont-1983.