SANBORN, Circuit Judge.
The Panhandle Eastern Pipe Line Company (which will be referred to as “Panhandle”), in its response to the order to show cause issued on December 12, 1945, has asked that the stay order entered by this Court on December 7, 1942,1 be modified so as to relieve Panhandle of the expense of distributing to ultimate consumers funds impounded under the stay order.
[910]*910The stay order was granted upon the application of Panhandle, which was seeking a review and reversal of the order of the Federal Power Commission dated September 23, 1942, which directed Panhandle to reduce by about five million dollars per annum its rates for the transportation and sale of natural gas in interstate commerce for resale. While the question presented by Panhandle in its petition for review of the order of the Commission justified the granting of a stay upon appropriate conditions (Russell v. Farley, 105 U.S. 433, 438, 26 L.Ed. 1060), it developed that the challenged order of the Commission was not invalid. Panhandle Eastern Pipe Line Co. v. Federal Power Commission, 8 Cir., 143 F.2d 488, affirmed 324 U.S. 635, 65 S.Ct. 821.
This Court is now confronted with the problem of distributing impounded funds of approximately twenty-five million dollars, representing overcharges collected by Panhandle from distribution companies during the impounding period. Most of these distributors, which bought gas at wholesale from Panhandle and sold it at retail to ultimate consumers, have disclaimed any interest in the funds impounded and have agreed that so much of the funds as was derived from the sales of gas to them by Panhandle belongs to their customers. The expense of distributing the impounded funds to the ultimate consumers of gas purchased from these distributors will be large. It is estimated that it will exceed one million dollars, and conceivably may run into higher figures. This Court, before attempting any distribution of the funds, must determine whether the entire expense of distribution shall be borne by Panhandle, as contemplated by the stay order, or whether all or part of the expense shall be paid out of the impounded funds.
The condition of the stay order which Panhandle contends should be modified reads as follows: “The entire expenses of impounding (including, among other things, protecting, investing and distributing to [911]*911petitioners or to ultimate consumers) of these funds shall be borne by petitioners. Whether any earnings on such funds (while so impounded) may be applied upon such expenses is reserved for future determination. When and as required by orders of this Court, petitioners shall pay to the custodian such expense money, upon triplicate receipts, which shall be filed as above.”
Panhandle argues that the condition is invalid and inequitable in so far as it imposes upon Panhandle any expense of distribution of the impounded funds to ultimate consumers. This argument is based largely upon the case of Central States Electric Co. v. City of Muscatine, 324 U.S. 138, 65 S.Ct. 565, the implications of which Panhandle believes indicate that this Court lacked jurisdiction to impose upon Panhandle the burden of the expense of distributing these funds to persons with whom it had no contractual relations and from whom it collected no part of the overcharges impounded. The implications drawn by Panhandle from the Central States case relative to the power of this Court to condition the stay order as it did are, we think, unjustified in view of what the Supreme Court has ruled in Russell v. Farley, supra, 105 U.S. 433, 438, 443, 26 L.Ed. 1060; Meyers v. Block, 120 U.S. 206, 214, 7 S.Ct. 525, 30 L.Ed. 642; Inland Steel Co. v. United States, 306 U.S. 153, 156-158, 59 S.Ct. 415, 83 L.Ed. 557; and United Slates v. Morgan, 307 U.S. 183, 191, 193, 194, 197, 198, 59 S.Ct. 795, 83 L.Ed. 1211.
In the Inland Steel case, 306 U.S. at pages 156, 157, 59 S.Ct. at page 417, 83 L.Ed. 557, the Supreme Court said:
“A Court of equity 'in the exercise of its discretion, frequently 'resorts to the expedient of imposing terms and conditions upon the party at whose instance it proposes to act. The power to impose such conditions is founded upon, and arises from, the discretion which the court has in such cases, to grant, or not to grant, the injunction applied for. It is a power inherent in the court, as a court of equity, and has been exercised from time immemorial.’
“In the exercise of its discretion, the District Court imposed conditions in its decree granting appellant’s petition for an interlocutory injunction. Appellant neither objected to the conditions nor sought review of the Court’s action in imposing them, but under the interlocutory injunction enjoyed for three years the suspension —which it has sought — of the Commission’s order, pending litigation. Now, the litigation ended, appellant insists that the District Court lacked jurisdiction to do more than vacate its interlocutory injunction and dismiss the petition, since no pleadings of the Railroad or the Commission 'sought the creation of the special allowance account. But this overlooks the governing principle that it is the duty of a court of equity granting injunctive relief to do so upon conditions that will protect all — including the public — whose interests the injunction may affect.”
In the Morgan case, 307 U.S. at pages 193, 194, 59 S.Ct. at page 801, 83 L.Ed. 557, the Court said: “* * * In taking the payments into custody it [the district, court] acted as a court of equity, charged both with the responsibility of protecting the fund and of disposing of it according to law, and free in the discharge of that duty to use broad discretion in the exercise of its powers in such manner as to avoid an unjust or unlawful result. It entered into no contract or understanding with the litigants; it entered into no undertaking as to the manner of disposing of the fund; its duty with respect to it is that prescribed by the applicable principles of law and equity for the protection of the litigants and the public, whose interests the injunction and the final disposition of the fund affect. Inland Steel Co. v. United States, supra.”
At the time the stay order was entered in this cause, this Court, of course, realized that the impounded funds would be made up of alleged overcharges collected by Panhandle from distributors; that all of such excess charges would be paid to Panhandle by the distributors, but that virtually all of the charges would be collected by the distributors from their retail customers; and that, if the order of the Commission was valid, most of the impounded funds would have to be distributed by the Court to the ultimate consumers.
Free access — add to your briefcase to read the full text and ask questions with AI
SANBORN, Circuit Judge.
The Panhandle Eastern Pipe Line Company (which will be referred to as “Panhandle”), in its response to the order to show cause issued on December 12, 1945, has asked that the stay order entered by this Court on December 7, 1942,1 be modified so as to relieve Panhandle of the expense of distributing to ultimate consumers funds impounded under the stay order.
[910]*910The stay order was granted upon the application of Panhandle, which was seeking a review and reversal of the order of the Federal Power Commission dated September 23, 1942, which directed Panhandle to reduce by about five million dollars per annum its rates for the transportation and sale of natural gas in interstate commerce for resale. While the question presented by Panhandle in its petition for review of the order of the Commission justified the granting of a stay upon appropriate conditions (Russell v. Farley, 105 U.S. 433, 438, 26 L.Ed. 1060), it developed that the challenged order of the Commission was not invalid. Panhandle Eastern Pipe Line Co. v. Federal Power Commission, 8 Cir., 143 F.2d 488, affirmed 324 U.S. 635, 65 S.Ct. 821.
This Court is now confronted with the problem of distributing impounded funds of approximately twenty-five million dollars, representing overcharges collected by Panhandle from distribution companies during the impounding period. Most of these distributors, which bought gas at wholesale from Panhandle and sold it at retail to ultimate consumers, have disclaimed any interest in the funds impounded and have agreed that so much of the funds as was derived from the sales of gas to them by Panhandle belongs to their customers. The expense of distributing the impounded funds to the ultimate consumers of gas purchased from these distributors will be large. It is estimated that it will exceed one million dollars, and conceivably may run into higher figures. This Court, before attempting any distribution of the funds, must determine whether the entire expense of distribution shall be borne by Panhandle, as contemplated by the stay order, or whether all or part of the expense shall be paid out of the impounded funds.
The condition of the stay order which Panhandle contends should be modified reads as follows: “The entire expenses of impounding (including, among other things, protecting, investing and distributing to [911]*911petitioners or to ultimate consumers) of these funds shall be borne by petitioners. Whether any earnings on such funds (while so impounded) may be applied upon such expenses is reserved for future determination. When and as required by orders of this Court, petitioners shall pay to the custodian such expense money, upon triplicate receipts, which shall be filed as above.”
Panhandle argues that the condition is invalid and inequitable in so far as it imposes upon Panhandle any expense of distribution of the impounded funds to ultimate consumers. This argument is based largely upon the case of Central States Electric Co. v. City of Muscatine, 324 U.S. 138, 65 S.Ct. 565, the implications of which Panhandle believes indicate that this Court lacked jurisdiction to impose upon Panhandle the burden of the expense of distributing these funds to persons with whom it had no contractual relations and from whom it collected no part of the overcharges impounded. The implications drawn by Panhandle from the Central States case relative to the power of this Court to condition the stay order as it did are, we think, unjustified in view of what the Supreme Court has ruled in Russell v. Farley, supra, 105 U.S. 433, 438, 443, 26 L.Ed. 1060; Meyers v. Block, 120 U.S. 206, 214, 7 S.Ct. 525, 30 L.Ed. 642; Inland Steel Co. v. United States, 306 U.S. 153, 156-158, 59 S.Ct. 415, 83 L.Ed. 557; and United Slates v. Morgan, 307 U.S. 183, 191, 193, 194, 197, 198, 59 S.Ct. 795, 83 L.Ed. 1211.
In the Inland Steel case, 306 U.S. at pages 156, 157, 59 S.Ct. at page 417, 83 L.Ed. 557, the Supreme Court said:
“A Court of equity 'in the exercise of its discretion, frequently 'resorts to the expedient of imposing terms and conditions upon the party at whose instance it proposes to act. The power to impose such conditions is founded upon, and arises from, the discretion which the court has in such cases, to grant, or not to grant, the injunction applied for. It is a power inherent in the court, as a court of equity, and has been exercised from time immemorial.’
“In the exercise of its discretion, the District Court imposed conditions in its decree granting appellant’s petition for an interlocutory injunction. Appellant neither objected to the conditions nor sought review of the Court’s action in imposing them, but under the interlocutory injunction enjoyed for three years the suspension —which it has sought — of the Commission’s order, pending litigation. Now, the litigation ended, appellant insists that the District Court lacked jurisdiction to do more than vacate its interlocutory injunction and dismiss the petition, since no pleadings of the Railroad or the Commission 'sought the creation of the special allowance account. But this overlooks the governing principle that it is the duty of a court of equity granting injunctive relief to do so upon conditions that will protect all — including the public — whose interests the injunction may affect.”
In the Morgan case, 307 U.S. at pages 193, 194, 59 S.Ct. at page 801, 83 L.Ed. 557, the Court said: “* * * In taking the payments into custody it [the district, court] acted as a court of equity, charged both with the responsibility of protecting the fund and of disposing of it according to law, and free in the discharge of that duty to use broad discretion in the exercise of its powers in such manner as to avoid an unjust or unlawful result. It entered into no contract or understanding with the litigants; it entered into no undertaking as to the manner of disposing of the fund; its duty with respect to it is that prescribed by the applicable principles of law and equity for the protection of the litigants and the public, whose interests the injunction and the final disposition of the fund affect. Inland Steel Co. v. United States, supra.”
At the time the stay order was entered in this cause, this Court, of course, realized that the impounded funds would be made up of alleged overcharges collected by Panhandle from distributors; that all of such excess charges would be paid to Panhandle by the distributors, but that virtually all of the charges would be collected by the distributors from their retail customers; and that, if the order of the Commission was valid, most of the impounded funds would have to be distributed by the Court to the ultimate consumers. It is apparent that this Court, in conditioning the order granting the stay, gave due consideration to the question whether Panhandle should be required to pay interest upon the alleged overcharges impounded, and whether, if they were finally to be distributed. to ultimate consumers, Panhandle should bear the expense of distribution. The stay order shows that the Court concluded that Panhandle should bear the ex[912]*912pense of distribution, but should not — unless thereafter ordered by the Court — be required to pay interest on the funds impounded, and that the Court should reserve for future determination the question whether the earnings of the funds should be applied to the distribution expense. The order of December 7, 1942, stated the terms and conditions upon which this Court was willing to grant to Panhandle a stay of the order of the Commission during the pend-ency of this cause. These terms and conditions, we think, were reasonable. They were acceptable to, and were accepted by, Panhandle. We cannot believe that this Court abused its discretion in requiring that Panhandle hold harmless the ultimate distributees of these funds from the costs and expenses attributable to the granting of the stay which Panhandle sought and which this Court could have denied. Moreover, a requirement that Panhandle pay interest on the alleged overcharges while they were being impounded might well have been more burdensome than the requirement that it pay the expenses of distribution.
It is contended, however, that it would be inequitable to enforce the challenged condition of the stay order. There is, we think, no adequate basis for a conclusion that the expenses of distribution will be so great as to justify this Court in relieving Panhandle of the obligation imposed by the stay order, to pay them. The impounded funds, which have been invested in short-term Government securities bearing interest at .less than one per cent, have produced very substantial earnings. These earnings and any future earnings should, we think, be applied .against the expenses of distribution which this Court must necessarily incur in disposing of the funds. This conclusion is based upon the practical consideration that if the present and future earnings were' not applied upon expenses of distribution, the delay and expense involved in calculating the trifling amount which would be added, out of the earnings, to the share of the impounded funds belonging to each of the several million consumers, would more than offset any possible benefit to them. We think that to apply the earnings of the funds to the expense of distributing them will be to expedite and simplify the distribution, to the advantage of the distributees. The stay order will be modified so as to provide for the application of earnings to the expenses of distribution. The Court will at all times welcome any suggestions from Panhandle as to means or methods for keeping down such expenses.
Except as indicated herein, the prayer of Panhandle for a modification of the stay order is denied.
Note: Judges STONE and JOHNSEN, of this Court, who, with the late Judge Van VALKENBURGH, entered the stay order of December 7, 1942, sat with the Court at the hearing on Panhandle’s request for a modification of the order, but in an advisory capacity only.