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    Newton v. Consolidated Gas Co. of NY, 265 U.S. 78 (1924)

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    The Supreme Court ruled that premiums paid by a gas company for surety bonds required by the court during litigation could be taxed as costs against the defeated party. The gas company had paid premiums to substitute surety bonds for cash it was required to impound pending appeal of a rate case. While costs orders are usually not appealable, the Court found it had jurisdiction here because the question was whether the premiums were a legally assessable cost, not merely the amount. The Court had not previously addressed whether bond premiums could be taxed as costs, and other courts had differed, so it took the appeal to consider the issue.

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    Newton v. Consolidated Gas Co. of NY, 265 U.S. 78 (1924)

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    The Supreme Court ruled that premiums paid by a gas company for surety bonds required by the court during litigation could be taxed as costs against the defeated party. The gas company had paid premiums to substitute surety bonds for cash it was required to impound pending appeal of a rate case. While costs orders are usually not appealable, the Court found it had jurisdiction here because the question was whether the premiums were a legally assessable cost, not merely the amount. The Court had not previously addressed whether bond premiums could be taxed as costs, and other courts had differed, so it took the appeal to consider the issue.

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    Filed: 1924-05-12 Precedential Status: Precedential Citations: 265 U.S. 78 Docket: 565

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    The Supreme Court ruled that premiums paid by a gas company for surety bonds required by the court during litigation could be taxed as costs against the defeated party. The gas company had paid premiums to substitute surety bonds for cash it was required to impound pending appeal of a rate case. While costs orders are usually not appealable, the Court found it had jurisdiction here because the question was whether the premiums were a legally assessable cost, not merely the amount. The Court had not previously addressed whether bond premiums could be taxed as costs, and other courts had differed, so it took the appeal to consider the issue.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd
    Download as court, pdf, or txt
    19 views6 pages

    Newton v. Consolidated Gas Co. of NY, 265 U.S. 78 (1924)

    Uploaded by

    Scribd Government Docs
    The Supreme Court ruled that premiums paid by a gas company for surety bonds required by the court during litigation could be taxed as costs against the defeated party. The gas company had paid premiums to substitute surety bonds for cash it was required to impound pending appeal of a rate case. While costs orders are usually not appealable, the Court found it had jurisdiction here because the question was whether the premiums were a legally assessable cost, not merely the amount. The Court had not previously addressed whether bond premiums could be taxed as costs, and other courts had differed, so it took the appeal to consider the issue.

    Copyright:

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    Download as COURT, PDF, TXT or read online from Scribd
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    of 6

    265 U.S.

    78
    44 S.Ct. 481
    68 L.Ed. 909

    NEWTON, Atty. Gen., et al.


    v.
    CONSOLIDATED GAS CO. OF NEW YORK.
    No. 565.
    Decided May 12, 1924.

    [Argument of Counsel from pages 78-80 intentionally omitted]


    Mr. Chief Justice TAFT delivered the opinion of the Court.

    This was an equitable action to enjoin the continued enforcement of chapter


    125 of the Laws of New York of 1906, which fixed at 80 cents a thousand feet
    the price at which gas was to be furnished to private consumers in the various
    boroughs in the city of New York, on the ground that the rate was confiscatory
    and violated the rights of the company under the due process clause of the
    Fourteenth Amendment of the federal Constitution.

    The main controversy was settled in favor of the company by this court in
    March, 1922. 258 U. S. 165, 42 Sup. Ct. 264, 66 L. Ed. 538. Upon another
    appeal, we directed a reduction of the master's fees by $28,750. 259 U. S. 101,
    42 Sup. Ct. 438, 66 L. Ed. 844. When the case reached the District Court
    (consolidated Gas Co. of New York v. Newton, 291 Fed. 704) for further
    proceedings, the defendants made a motion to retax costs, objecting to half a
    dozen items charged. The court allowed certain exceptions, but overruled
    others. The only one overruled, and here insisted on, is for $76,086.50 for
    premiums paid by the company to surety companies for bonds securing the
    repayment of a large amount of money impounded with the special master.

    When the District Court found that a rate of 80 cents was confiscatory, it
    granted an injunction to prevent the Attorney General of the state, the district
    attorney of New York county, and the Public Service Commission from
    enforcing such a rate, but as a condition of such injunction it required the

    company to impound with a special master all sums charged for gas to
    consumers over and above the 80-cent rate until the issue could be finally
    settled in this court. This court, although it found error in certain other
    limitations of the order, held that so much of it was within the court's
    discretion. 258 U. S. 165, 42 Sup. Ct. 264, 66 L. Ed. 538. The plaintiff, after
    the order of impounding was made, secured leave from the court to substitute
    the surety bonds in lieu of cash. Consolidated Gas Co. of New York v. Newton,
    267 Fed. 231. In granting this leave, the District Judge said:
    4

    'The plaintiff urges with force, I think, that to impound all the moneys over 80
    cents for a period perhaps of a year will cause loss both to itself and to the
    consumers. It suggests that it have the right to substitute adequate securities.
    The best that the special master can get on the deposits is probably 3 1/4 per
    cent.; the plaintiff, if required to finance its temporary requirements, must pay
    much moreit says 14 per cent. In any case it will sustain a loss which will
    profit no one but the banks, so far as appears. I see no advantage in insisting
    upon impounding the moneys, if adequate security can be otherwise provided.'

    The bonds were required to secure, not only the cash for which they were
    substituted, but interest at 7 per cent. to become part of the fund. The court
    continued:

    'I have required a substantial rate of interest, because the plaintiff will be in
    effect using the consumers' money. On the one hand, the consumer profits by
    getting more than he could from the banks; on the other, the plaintiff profits by
    being relieved from high rates of interest. The rate at which the plaintiff has
    sold its bonds is 7 per cent. and on short financing the rates are much higher. I
    think that 7 per cent. should be the rate, even though the plaintiff must pay a
    premium to get the bond; it will recover back all that the consumers are not
    eventually entitled to.'

    From the final decree of the District Court, fixing the costs, an appeal was
    taken to this court. To that appeal the Public Service Commission of New
    York, as defendant in the suit, was not made a party, and no summons and
    severance was issued against it. 264 U. S. 571, 44 Sup. Ct. 401, 68 L. Ed. .
    Accordingly the appeal was dismissed in the following per curiam:

    'Dismissed for want of jurisdiction, upon authority of Masterson v. Herndon, 10


    Wall. 416; Hardee v. Wilson, 146 U. S. 179, 180; Sipperley v. Smith, 155 U. S.
    86, 89; Maytin v. Vela, 216 U. S. 598, 601.'

    Upon a petition for rehearing the appellants bring to the knowledge of this
    court that by chapter 134 of the Laws of 1921 the Public Service Commission
    for the First District, which was here concerned, was abolished, and that
    therefore the appellants were not required by summons and severance to
    exclude from the future capacity to appeal, a defunct state board originally
    joined with them as a codefendant. Mercantile Trust Co. v. Kanawha & Ohio
    Ry. Co., 58 Fed. 6, 14, 7 C. C. A. 3. We think the abolition of the Public
    Service Commission made it unnecessary to make it a party to this appeal, and
    that the dismissal heretofore entered for lack of service of a summons and
    severance upon it should be set aside.

    10

    The appellee insists that the appeal must be dismissed, first, because it is not
    from a final decree; and, second, because no appeal lies from a decree for costs
    alone.

    11

    First. If the subject-matter is appealable at all, there would seem to be no doubt


    that the decree has all the characteristics of finality. An execution can issue at
    once to collect the costs as taxed, including the item here complained of.
    Trustees v. Greenough, 105 U. S. 527, 26 L. Ed. 1157; Farmers' Loan & Trust
    Co., Petitioner, 129 U. S. 206, 9 Sup. Ct. 265, 3 L. Ed. 656; In re Michigan
    Central R. Co., 124 Fed. 727, 731, 59 C. C. A. 643.

    12

    Second. Is the order of the District Court for this controverted item appealable?
    There is no doubt that, as a general rule, an appeal does not lie from a decree
    solely for costs, and, if an appeal on the merits be taken and affirmed, it will
    not be reversed on a question of costs. Canter v. American Insurance Co., 3 Pet.
    307, 319, 7 L. Ed. 688; Elastic Fabrics Co. v. Smith, 100 U. S. 110, 112, 25 L.
    Ed. 547; Paper Bag Cases, 105 U. S. 766, 772, 26 L. Ed. 959; City Bank of Fort
    Worth v. Hunter, 152 U. S. 512, 516, 14 Sup. Ct. 675, 38 L. Ed. 534; Stuart v.
    Boulware, 133 U. S. 78, 10 Sup. Ct. 242, 33 L. Ed. 568; Du Bois v. Kirk, 158
    U. S. 58, 67, 15 Sup. Ct. 729, 39 L. Ed. 895; Citizens' Bank v. Cannon, 164 U.
    S. 319, 323, 17 Sup. Ct. 89, 41 L. Ed. 451; Wingert v. First National Bank, 223
    U. S. 670, 672, 32 Sup. Ct. 391, 56 L. Ed. 605.

    13

    Questions of costs in admiralty and equity are discretionary, and the action of
    the court is presumptively correct. United States v. Brig Malek Adhel, 2 How.
    210, 237, 11 L. Ed. 239; The Scottland, 118 U. S. 507, 519, 6 Sup. Ct. 1174, 30
    L. Ed. 153. The allowance of costs in the federal courts rests, not upon express
    statutory enactment by Congress, but upon usage long continued and confirmed
    by implication from provisions in many statutes. Ex parte Peterson, 253 U. S.
    300, 316, 40 Sup. Ct. 543, 64 L. Ed. 919. And see Pennsylvania v. Wheeling &

    B. Bridge Co., 18 How. 460, 15 L. Ed. 449.


    14

    The rule forbidding appeals from decrees for costs only is easily deducible
    from the discretion vested in the trial court in fixing them and the better
    opportunity of that court to exercise that discretion from its greater intimacy
    with details of the pleadings, hearings, and orders in the case. When the power
    of the court to assess costs against either party is not in dispute, or the mere
    amount to be fixed is in issue, appeals on such questions alone are not allowed.
    But the rule is not absolute, and should not be enforced when the trial court
    assumes the power to assess as costs against a fund or a party expenditures of a
    class not legally assessable as such. Where a question of this kind is made,
    appeals have been allowed. Thus in Trustees v. Greenough, 105 U. S. 527, 26
    L. Ed. 1157, an appeal was allowed from a decree in equity solely for costs,
    when the question was whether they could be properly paid out of a fund in the
    control of the court. So in Re Michigan Central Railroad Co., 124 Fed. 727, 59
    C. C. A. 643, an intervener was allowed to appeal from a decree of a trial court,
    allowing costs in favor of the clerk, when it was objected that neither by statute
    nor general law could such costs be allowed by the court in favor of the clerk.
    The question is fully considered by the Circuit Court of Appeals of the Sixth
    Circuit in an opinion by Judge Lurton, afterwards Mr. Justice Lurton, of this
    court. The many cases cited in which appeals from decrees for costs had been
    denied were distinguished, as involving a question, not of positive law, but of
    discretion. We think the distinction made in that case a sound one, and that, as
    the question is here presented, the appeal is a proper one.

    15

    The question is whether premiums for bonds, paid by a party litigant to


    preserve his rights and save him from loss under the orders of court pending the
    litigation, can be taxed as costs against the defeated party. There has been
    considerable difference of opinion among the District Courts and the Circuit
    Courts of Appeals on this subject. This court has never considered it. The South
    Portland (D. C.) 95 Fed. 295; Jacobsen v. Lewis Klondike Expedition Co. (C.
    C. A. Ninth Circuit) 112 Fed. 73, 50 C. C. A. 121; Edison v. Mutoscope Co.
    (C. C.) 117 Fed. 192; The John D. Dailey (D. C.) 158 Fed. 642; The Bencliff
    (D. C.) 158 Fed. 377; The Hurstdale (D. C.) 171 Fed. 607; The Volund (C. C.
    A. Second Circuit) 181 Fed. 643, 104 C. C. A. 373; Jones v. Edward B. Smith
    Co. (D. C.) 183 Fed. 990; The Europe (C. C. A. Ninth Circuit) 190 Fed. 475,
    481, 111 C. C. A. 307are cases in which, either by rule of court or through
    usage, such costs have been taxed in admiralty cases or equity causes. In Lee
    Injector Mfg. Co. v. Penberthy Injector Co. (C. C. A. Sixth Circuit) 109 Fed.
    964, 48 C. C. A. 760; The Governor Ames (C. C. A. First Circuit) 187 Fed. 40,
    48, 109 C. C. A. 94; The Texas (C. C. A. Third Circuit) 226 Fed. 897, 905, 141
    C. C. A. 501; Parkerson v. Borst (C. C. A. Fifth Circuit) 256 Fed. 827, 168 C.

    C. A. 173; In re Hoyt (D. C.) 119 Fed. 987, and in The Willowdene (D. C.) 97
    Fed. 509, it is held that where the disbursement is not made as the result of any
    rule of practice, and there is no statute, rule, or usage by which it is made a part
    of the taxable costs of the case, it cannot be allowed. In The Texas, supra, the
    Circuit Court of Appeals of the Third Circuit, after expressing its approval of
    the view that a rule of court or a practice equivalent thereto is necessary to
    justify the taxation of such costs, said:
    16

    'But we may also say that we think such a rule or practice has become so
    desirable that we feel confident the court below will take an early opportunity
    to conform its procedure in this respect to the custom prevailing in other
    districts.'

    17

    The District Judge, in passing on the issue, said that it had been the custom in
    the Second circuit to allow as costs premiums on stipulations given to release
    vessels from arrest, citing The Volund, supra; The Hurstdale, supra; The John
    D. Dailey, supra; that Judge Lacombe, in Edison v. Mutoscope Co., supra, had
    allowed as costs premiums upon a supersedeas bond in an equity case; and that
    there had been a uniform usage for the 14 years during which he had sat in that
    district to allow such items.

    18

    We think that, under the usage thus shown in the Second Circuit, the District
    Court, had power to assess these premiums as costs in this suit in equity. It is
    apparent from the circumstances already set forth that the order made by the
    District Court, under which these bonds were secured and substituted for cash,
    was not only in the interest of the company, but of the consumers in whose
    behalf the defendants below were contending. Had the state authorities
    prevailed in this court, they would have secured from the surety companies on
    these bonds, for distribution among the customers, not only the amount of
    money impounded, but also 7 per cent. interest thereon, to compensate them for
    the taking of their money and the delay in its return. As the cause went against
    them, it was not an abuse of discretion to hold that the defendants, who have
    conducted the litigation and lost, should pay the costs of an arrangement made
    in their interest, because of an expense with which the company had been
    unjustly burdened. It may be that, in a circuit and district where no usage or
    rule of court exists, such costs may not be taxed. We are not called upon to
    decide that. It is enough, that we may decide this appeal, to hold that it was not
    an abuse of discretion or a violation of law for the District Court in the Second
    Circuit to allow the item.

    19

    By the Act of August 13, 1894 (chapter 282, 28 Stat. 279 [Comp. St. 32933300]), Congress has made elaborate provision for the safe use of surety

    companies as security upon bonds required in court and other proceedings, and,
    while it does not exclude individual sureties, it offers a most convenient and
    stable means of obtaining indemnity against the default of parties. This is much
    to be preferred to individual sureties, because a properly conducted surety
    company makes it its business promptly to investigate and to meet its liabilities.
    Acceptance of the service of such companies is, of course, upon the basis of a
    regular rate of compensation, and where a party litigant has, because of the
    claim of the opposing party, been compelled to furnish such security, and it
    turns out that it was wrongly required, a rule of court or usage which imposes
    the expense of the security on the defeated party is not unreasonable.
    20

    The decree of the District Court is affirmed.

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