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Arizona Public Service Co. v. Southern Union Gas Co.

Supreme Court of Arizona

January 11, 1954


Page 436

[76 Ariz. 375] Snell & Wilmer, by Edward Jacobson, Perry M. Ling and Mark Wilmer, McDaniel & Franks, and Nicholas H. Powell, Phoenix, for appellants.

Evans, Hull, Kitchel & Jenckes, by Norman S. Hull and John E. Madden, Phoenix, Favour & Quail, Prescott, W. E. Ferguson, Holbrook, C. B. Wilson, Flagstaff (Willis L. Lea, Jr., Dallas, Tex., of counsel), for appellee Southern Union Gas Co.

H. J. Wolfinger, Prescott, for appellee City of Prescott.

John P. Clark, City Atty., Winslow (Dennis J. Sweeney, Winslow, of counsel), for appellee City of Winslow.

Urban R. Miller, Town Atty., Williams, for appellee Town of Williams.

Orrin C. Compton, City Atty., Flagstaff, for appellee City of Flagstaff.

Page 437

WINDES, Justice.

Northern Arizona Light and Power Company, an Arizona public service corporation, hereinafter designated Northern, C. Earl Rogers and four other individual residents, citizens, and taxpayers of the city of Prescott, Arizona, hereinafter referred to as individual plaintiffs, filed an action against Southern Union Gas Company, a Delaware corporation, herein designated Southern, and the city of Prescott, seeking injunctive relief and a judgment declaring that a franchise issued by the city of Prescott and a certificate of convenience and necessity issued by the Arizona Corporation Commission to Southern authorizing it to distribute natural gas are void. The city of Winslow, the city of Flagstaff, and the town of Williams upon application were allowed to intervene. They will be referred to as intervenors. Arizona Public Service Company, an Arizona public service corporation and successor in interest to the Northern Arizona Light and Power Company, has been substituted as appellant herein. The cause was tried before the court without a jury. After the trial, and judgment dismissing plaintiffs' complaint against defendants and in favor of intervenors, Northern and the individual plaintiffs appeal.

The essential facts controlling the rights of the parties cannot be disputed and are substantially as follows: In October, 1902, the city of Prescott granted the Arizona Power Company, an Arizona corporation, a 50-year franchise for the distribution to its citizens of manufactured gas. In 1948 this franchise holder requested from Prescott an extension thereof to authorize the distribution of natural gas. Pursuant to a municipal election this request was rejected. In 1949, Northern acquired the franchise [76 Ariz. 376] rights of Arizona Power Company, as well as its certificate of convenience and necessity theretofore issued by the Arizona Corporation Commission, to distribute manufactured gas in Prescott.

Southern qualified as a foreign corporation to do business in Arizona on July 14, 1948. Theretofore in June of that year, it had appeared before the municipal officers and made application to Prescott, Williams, Winslow, Holbrook, Flagstaff, and the counties of Yavapai, Coconino and Navajo for the necessary franchises to enable it to engage in the distribution of natural gas in these communities. Subsequent to Southern's qualifying to do business as a foreign corporation, special elections were held in the municipalities involved pursuant to the provisions of section 16-1002, A.C.A.1939, and the franchises were authorized and were duly issued by the respective municipalities.

On July 15, 1948, the day after qualifying as a foreign corporation, Southern filed with the Arizona Corporation Commission an application for a certificate of convenience and necessity for the transportation, distribution, and sale of natural gas as a public utility in Mohave, Yavapai, Coconino and Navajo counties. Arizona Power Company, predecessor in interest of Northern, appeared before the commission and opposed Southern's application and sought for itself a certificate of convenience and necessity to the same effect. The commission after hearing denied the request of the Arizona Power Company and on September 28, 1948, entered its order reciting that each applicant was seeking a certificate of convenience and necessity; that Arizona Power Company had no franchise from Prescott and that Southern's application for such was pending; that Southern was well qualified to render natural gas service in the municipality as soon as the supply was available from San Juan Pipeline Company; that Southern would meet the requirements of the statutes and the commission when it obtained and submitted a franchise from the city of Prescott and that in the event Southern was granted such franchise the certificate should issue to it. The commission then ordered that it would issue the certificate to Southern upon presentation of evidence satisfactory to the commission that Southern had the municipal franchise from Prescott.

Subsequent to the foregoing order, the election was held in Prescott and its franchise was granted Southern on December 13, 1948. Thereafter on December 22, 1948, the commission ordered the issuance to

Page 438

Southern of its certificate of convenience and necessity reciting in said order that it had received satisfactory evidence of the granting to Southern by Prescott of a municipal natural-gas franchise.

There are submitted to us 21 assignments of error, and we shall not consider them individually but will consider the important and controlling principles of law involved. The two principal legal bases offered to support[76 Ariz. 377] plaintiffs' position that the judgment for defendants is unwarranted are (1) that Southern had no valid franchise from the city of Prescott or the county of Yavapai, for the reason that at the time Southern made application therefor it was then a foreign corporation not qualified to do business in the state of Arizona; and (2) that Southern was disqualified under the provision of section 69-262, A.C.A.1939, to engage in the public utility business in Arizona, and the franchises and the certificate of convenience and necessity are therefore null and void. These propositions clash head-on with the plea of Southern that such matters were or should have been decided or presumably were decided by the corporation commission at the time it heard the applications of Southern and Arizona Power Company for their respective certificates of convenience and necessity and Arizona Power Company's opposition to the granting of Southern's application, and no request for a rehearing having been made and in the event the same were denied the statutory remedy pursued, the same is res judicata.

Our statutes on the subject under consideration expressly provide in substance that when the commission has made a decision, any interested party or the attorney general on behalf of this state may apply for a rehearing, section 69-248, A.C.A.1939; that in the event rehearing be denied, the dissatisfied party or the attorney general on behalf of the state may bring an action in the superior court against the commission; that except by this form of action, no court of this state shall have jurisdiction to enjoin or review the commission's decision, section 69-249, A.C.A.1939; and that in all collateral actions the decision of the commission shall be conclusive. Section 69-247, A.C.A.1939.

We have held that the corporation commission in rendering its decision acts judicially and any matters decided are conclusive, subject only to court test in the manner provided by section 69-247, supra, and in the absence of pursuing such remedy the decision is not subject to collateral attack. Phoenix Ry. Co. of Arizona v. Lount, 21 Ariz. 289, 187 P. 933, 937. The general rule, even in the absence of such express statute, is that a judgment may not be collaterally attacked unless the absence of jurisdiction appears from the record. 31 Am.Jur., Judgments, section 602. In harmony with the statute and the general rule, unless it appears from the record made by the corporation commission that it had no jurisdiction or power to decide that the franchise issued by Prescott to Southern is valid, the only method of upsetting the judgment on this ground is by the direct proceeding provided by the statutes. In Phoenix Ry. Co. of Arizona v. Lount, supra, the corporation commission had made an order authorizing the company to abandon a part of its line which it was operating under franchise from the city of Phoenix. Suit was brought by individuals for mandamus to compel the continuation of the operation. [76 Ariz. 378] This court, after holding that the commission had jurisdiction and power to order abandonment of the line, said:

'Whether the Corporation Commission's decision ordering changes in the plant of appellant, and in permitting appellant to abandon the portion of the Brill line on First and Pierce streets, was correct or not, we cannot inquire into or determine in this case. The commission had jurisdiction of the subject-matter, and its decision, whether right or wrong, whether supported or unsupported by the facts, must stand until set aside upon direct appeal to the courts. The commission being authorized by the Constitution and the laws to regulate, control, and supervise public utilities of the state, and to that end being vested with the power to institute and entertain hearings and render decisions therein, its decisions must be given force and effect to the extent expressed in the statute. Neither public

Page 439

utilities nor other parties to proceedings before the commission may ignore the commission's decisions and proceed to invoke the ...

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