author: J. SKELLY WRIGHT, Circuit Judge: MacKINNON, Circuit Judge

text:
    Torbert H. MACDONALD and Sidney R. Yates, Petitioners v. FEDERAL POWER COMMISSION, Respondent George Mitchell & Associates, Inc., et al., Intervenors
    No. 73-1715
    United States Court of Appeals, District of Columbia Circuit.
    Argued June 7, 1974.
    Decided Sept. 19, 1974.
    Rehearing Denied Dec. 2, 1974.

      Morton L. Simons, Washington, D. C., with whom Barbara M. Simons, Washington, D. C., was on the brief, for petitioners.
    John H. Burnes, Jr., Atty., F. P. C., with whom Leo E. Forquer, Gen. Counsel, and George W. McHenry, Jr., Sol., F. P. C., were on the brief, for respondent.
    Homer J. Penn, for intervenor George Mitchell & Associates, Inc.
    J. Stanley Stroud, Chicago, 111., was on the brief for intervenor Northern Illinois Gas Co.
    Paul E. Goldstein and Paul W. Mallory, Chicago, 111., were on the brief for intervenor Natural Gas Pipeline Co. of America.
    Charles F. Wheatley, Jr., Washington, D. C., entered an appearance for interve-nor American Public Gas Assn.
    Before WRIGHT and MacKINNON, Circuit Judges, and JAMESON,  Senior District Judge.

       Of the United States District Court for the District of Montana, sitting bv designation pursuant to 28 U.S.C. § 294(d) (1970).

   J. SKELLY WRIGHT, Circuit Judge:

Petitioner congressmen challenge orders of the Federal Power Commission permitting a natural gas producer, George Mitchell & Associates, to increase its rates for gas sold pursuant to a 1954 contract in interstate commerce to a level about 65 per cent above that which other producers in Mitchell’s production area may charge under the Commission’s recently established Other Southwest Area rates. Since the Commission justified its grant of “special relief” to Mitchell from the area rate by Mitchell’s commitment to invest a certain level of funds in further gas exploration and production, this case requires us to exercise again our responsibility to review the Commission’s efforts to respond to the natural gas shortage which all agree now confronts our nation. We recognize the broad discretion which has been entrusted to the Commission “to devise methods of [natural gas] regulation capable of equitably reconciling diverse and conflicting interests,” Mobil Oil Corp. v. FPC, 417 U.S. 283, 331, 94 S.Ct. 2328, 2356, 41 L.Ed.2d 72 (1974), and that this discretion must be given particular respect “in this time of acute energy shortage.” Id. However, the Supreme Court this year reaffirmed that the purposes of the Natural Gas Act, including that of protecting consumers from prices which are forced above a just and reasonable level by the market power of natural gas suppliers, impose limits on this discretion. And we cannot say on the basis of the record before us that the orders here challenged do not constitute a transgression of those limits.

I

The facts of this ease take on greater meaning in the context of the history of federal regulation of natural gas producers. In the first several years after the Supreme Court held the Federal Power Commission to have a responsibility under the Natural Gas Act to regulate gas producers as well as pipelines, the Commission evaluated the justness and reasonableness of a producer’s rates by attempting to determine the producer’s individual costs, including of course its capital costs, and adding thereto a fair profit return on its investments. In 1960, however, the Commission announced that it would divide the major gas producing regions in the United States into several discrete areas and would initiate proceedings to establish for each of these areas ceilings up to which it would approve producer charges as just and reasonable and above which it would not. In the ensuing area rate proceedings, these price ceilings were fixed by reference to average area-wide costs. This meant that low-cost producers would be able to charge rates appreciably above their individual costs and that high cost producers would be limited to rates which would not permit them to obtain a full fair return on their investments or perhaps even to recoup unsuccessful investment costs.

However, in its first area rate decision, Permian Basin Area Rate Proceeding, 34 FPC 159, 225-226 (1965), the Commission made clear that the area ceilings were not to be ignored whenever a showing was made of inordinate producer costs. The Commission declared it would grant relief from the ceilings only in more limited special circumstances such as “where a producer who has contracted for an above-ceiling price can show that his out-of-pocket expenses in connection with the operation of a particular well are greater than the revenues under the applicable area price.” 34 FPC at 226. The Commission stated that there might be other circumstances warranting special relief, but it did not elaborate on what they might be. The Supreme Court approved the Commission’s area rate policy as applied in the Permian Basin Area, specifically finding the provisions for special relief to be adequate. Permian Basin Area Rate Cases, 390 U.S. 747, 770-773, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). In subsequent decisions establishing rates for the other gas producing areas, including that for the Other Southwest Area, the Commission provided that special relief from the area rates could be obtained in accordance with its Permian Basin precedent.

By October 1971 when the order establishing rates in the Other Southwest Area was entered, the seriousness of our natural gas shortage had become evident to the Commission. In 1969 the Commission had instituted proceedings to reconsider in light of supply shortages the rates which it fixed for the Southern Louisiana Area in 1968. The l’esult of this reconsideration was a 1971 order increasing the ceiling rates for this area and providing incentives for commitment of additional gas to the interstate market. The Commission’s 1970 Hugoton-Anadarko and its 1971 Texas Gulf Coast rate decisions also both provided for increased rate incentives in response to the “present critical shortage of all forms of energy in the United States and the anticipated rapid growth of demand for natural gas.” As would be expected, the Commission set the Other Southwest Area rates as well after full consideration of the gas shortage. The Commission stated:

While we cannot expect that this area will be able to supply the potential demand upon it, it is important that its potential be fully utilized in this time of national need for all available gas.
* * * * * *
* * * The prices established herein provide incentives, however, to the producers in this marginal area to find gas and dedicate it to interstate commerce. The prices established will enable the interstate market to compete in price with the present and potential intrastate buyers in the area.

46 FPC 900, 910-911, 911-912 (1971). As noted by the Fifth Circuit in approving the Other Southwest Area rate decision, the Commission used average cost levels as its major point of reference but also considered supply and demand imbalance and existing inter- and intrastate price levels in establishing ceiling prices which it judged would provide adequate exploratory incentives. It is from these Other Southwest Area ceiling prices, established in response to the natural gas shortage, that George Mitchell & Associates sought to obtain “special relief.”

Mitchell filed its special relief petition less than a year after the Other Southwest Area decision. Under the established area rates Mitchell could sell gas produced from its Wise County region wells pursuant to a 1954 contract with Natural Gas Pipeline Company at 18.-8590 per Mcf. It requested permission to sell this gas at 30.250 per Mcf. In support of its request Mitchell did not argue that the costs of its Wise County area operations are significantly greater than the average costs of gas production in its district of the Other Southwest Area. Indeed it did not offer any evidence on its costs, or on the profitableness of its wells at the rates it was then charging. Rather Mitchell requested the sharply above ceiling rate in return for its promise to undertake additional exploration in the Wise County area.

After a prehearing conference had been commenced and testimony had been placed on the record, a settlement proposal agreed to by the Commission staff and by Natural was submitted by Mitchell to the Commission for its consideration. Two months later the Commission approved the settlement by a two to one vote, there being at the time two vacancies on the five-member Commission.

The settlement reflected closely Mitchell’s request for special relief. Mitchell was permitted to charge 30.250 per Mcf both for its old flowing gas and for new gas which it had not yet discovered and committed to interstate commerce. Mitchell agreed to drill at least 125 additional wells in the Wise County region covered in the contract between Mitchell and Natural. It agreed to sell in interstate commerce all the gas obtained from such additional drilling to Natural. Mitchell also agreed to expend $16,496,847 on gas or oil exploration within the continental United States in the five years from 1973 through 1977. This $16.5 million commitment is inclusive of the cost of drilling the new wells in the Wise County region. It is estimated that the Wise County drilling will cost close to $9 million. Mitchell agreed to offer to sell to Natural at competitive rates all gas which it discovered in drilling outside the Wise County contract area but within 25 miles of Natural’s pipeline in the State of Texas. If Natural fails to accept such an offer, Mitchell must make an effort to sell the gas in the interstate market at a price competitive with the intrastate or local market rate. Mitchell, however, has no obligation to expend any of the $16.5 million not used in drilling the 125 wells in the contract region — an estimated $7.5 million residual — in gas exploration close to the Natural pipeline, and gas discovered outside 25 miles from the pipeline need not even be offered to the interstate market.

The two-member Commission majority set forth a bare-boned rationale for approval of the settlement. It stressed that, although much evidence indicated the existence of major amounts of untapped gas in the Wise County area, Mitchell had been drilling in the area at a rapidly declining rate. The Commission cited studies which predicted that if no increase in drilling occurred in this region there would be in the years from 1973 to 1977 significant decreases in the gas which could be delivered to Natural from the region. The Commission reasoned that if Natural were forced to obtain its gas elsewhere its ultimate consumers would suffer because of the high price of alternative sources of gas. The Commission explained the hesitancy of Mitchell to locate and produce in the Wise County region by Mitchell’s inability in five years to recoup at the rate it could charge under the area ceiling the money it would have to expend in such location and production efforts. The Commission asserted that the 30.250 per Mcf rate requested by Mitchell for its sale of both old and new gas would be lower than any price which Natural could obtain from alternative sources and would not give Mitchell any “excessive profit returns.”

The Commission majority based its statement that Mitchell would not obtain excessive returns from the settlement on a computation which, though disputed by dissenting Chairman Nassikas and by petitioners, indicated that Mitchell in five years would obtain only $3 million in revenues from the rate increase above those funds which it would have to expend in drilling and running the wells. The Commission did not consider the $3 million to be “excessive” because Mitchell was committed to expending in gas or oil exploration $7.5 million beyond that which it would have to expend in the Wise County region on the 125 new wells.

The Commission, however, had no evidence before it on how Mitchell’s past costs and profit margins at the rates it had theretofore been charging compared with those of other producers in the Other Southwest Area. There was thus no way in which the Commission could determine from the record of this case what Mitchell's overall profit margin in the Wise County region would be under the 30.25^ per Mcf rate. The disputed $3 million figure represents only an incremental profit which will derive from the settlement agreement. Furthermore, as stressed by dissenting Chairman Nassikas, in computing even this incremental profit the Commission failed to consider any revenues Mitchell can expect to obtain beyond the five-year period in which it is committed to drilling the 125 wells. Chairman Nassi-kas, using present value accounting and the best though admittedly inadequate data on Mitchell, computed that if these revenues are acknowledged Mitchell could expect even under the area rates to earn a handsome 20 per cent return on its exploration investment. Chairman Nassikas urged remand of the proceeding for a further hearing before an administrative law judge to develop a record on Mitchell’s costs and profit margins. He also argued that the Commission should at least have required all extra revenues beyond those obtainable with area rates to be reinvested in exploration for gas which would have to be dedicated to the interstate market.

II

We cannot agree with the Commission that the Supreme Court’s recent decision in Mobil Oil Corp. v. FPC, supra, constrains us to approve the Commission’s grant of special relief to Mitchell on the evidentiary record before it. The Corn-mission’s action in the instant case goes a significant step beyond that which was given approval in Mobil Oil. As explained above at pages 358-359, the Commission has attempted to address the gas shortage by developing area rates which include not only an average area cost base, but also noncost incentives for new gas exploration and production. Mobil Oil was an affirmance of the Commission’s development of such area rates in the Southern Louisiana Area. Wise County is part of the Other Southwest Area, the rate structure for which was set by the Commission to provide adequate incentives for production in light of the gas shortage. The Other Southwest Area Rate structure was approved in In re Other Southwest Area Rate Case (OSWA I), 5 Cir., 484 F.2d 469 (1973), cert. denied, 417 U.S. 973, 94 S.Ct. 3180, 41 L.Ed.2d 1144 (June 18, 1974). Mitchell obtained a special exemption from the Other Southwest Area incentive rate ceilings without developing any evidentiary record to compare its costs and profit margins with the average costs and profit margins in the Other Southwest Area. We cannot conclude under the standards of appellate review of Commission orders set forth in Permian Basin Area Rate Cases, supra, and reaffirmed in Mobil Oil, that the Commission acted within its discretion in taking this additional step on the record before it.

The Mobil Oil Court focused upon three criteria of judicial review articulated in Permian Basin:

First, [the reviewing court] must determine whether the Commission’s order, viewed in light of the relevant facts and of the Commission’s broad regulatory duties, abused or exceeded its authority. Second, the court must examine the manner in which the Commission has employed the methods of regulation which it has itself selected, and must decide whether each of the order’s essential elements is supported by substantial evidence. Third, the court must determine whether the order may reasonably be expected to maintain financial integrity, attract necessary capital, and fairly compensate investors for the risks they have assumed, and yet provide appropriate protection to the relevant public interests, both existing and foreseeable. The court’s responsibility is not to supplant the Commission’s balance of these interests with one more nearly to its liking, but instead to assure itself that the Commission has given reasoned consideration to each of the pertinent factors.

Permian Basin Area Rate Cases, supra, 390 U.S. at 791-792, 88 S.Ct. 1344, 1373, 20 L.Ed.2d 312 quoted in Mobil Oil Corp. v. FPC, supra, 417 U.S. at 307-308, 94 S.Ct. at 345. The Supreme Court in Mobil Oil made clear that Courts of Appeals rather than itself have the major responsibility in applying these standards of review, especially that of determining whether substantial evidence supports each of the Commission’s findings. “Whether on the record as a whole there is substantial evidence to support agency findings is a question which Congress has placed in the keeping of the Courts of Appeals.” Mobil Oil, supra, 417 U.S. at 310, 94 S.Ct. at 2346, quoting from Universal Camera Corp. v. NLRB, 340 U.S. 474, 491, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

We cannot find on the basis of the evidentiary record developed by the Commission that it “has given reasoned consideration” and “appropriate protection” to the public interest in not paying prices for gas substantially in excess of those needed to induce production of an adequate gas supply. Though the “substantial evidence” standard has been applied with some flexibility, under any interpretation of its stringency it can be stated that there is not sufficient evidence supporting the Commission’s conclusion that Mitchell will not earn an excessive profit charging 30.25% per Mef on both its old flowing and newly discovered gas in the Wise County region.

This deficiency in the Commission’s order is critical. Protection of the consumer from profiteering in the gas industry was the primary purpose behind passage of the Natural Gas Act. “It is abundantly clear from the history of the Act and from the events that prompted its adoption that Congress considered that the natural gas industry was heavily concentrated and that monopolistic forces were distorting the market price for natural gas.” FPC v. Texaco, Inc., 417 U.S. 380, 397, 94 S.Ct. 2315, 2326, 41 L.Ed.2d 141 (1974). The “only justification for giving the Commission the duty to regulate prices was the determination by Congress that the producers have a supply that is so restricted in relation to demand that they have the economic power to bargain for prices that will be injurious to the public.” United Gas Improvement Co. v. FPC, 5 Cir., 290 F.2d 133, 135, cert. denied, 368 U.S. 823, 82 S.Ct. 41, 7 L.Ed.2d 27 (1961).

The Commission determined early in its regulation of natural gas producers that protection of the consumer from these producers’ market power could best be accomplished by setting rates tied to the producers’ costs. In this way the producers’ return on capital could be computed and held to that rate necessary to call forth needed gas supplies. As traced above, the Commission first set rates on an individual company cost basis before switching to its area-wide average cost policy. The Co.nmission’s cost-based approach to regulation obtained unanimous judicial approval. As stated by Judge MacKinnon, “[Wjhen the inquiry is whether a given rate is just and reasonable to the consumer, the underlying concern is whether it is low enough so that exploitation by the producer is prevented. * * * [Njo factors apart from producers’ costs are available to guide efforts to make that determination from the standpoint of the consumer.” City of Chicago v. FPC, 147 U.S.App.D.C. 312, 332, 458 F.2d 731, 751, cert. denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1971) (emphasis in original).

The courts have also made it clear that the Commission cannot fulfill its “responsibility to maintain adequate supplies at the lowest reasonable rate,” Mobil Oil Corp. v. FPC, supra, 417 U.S. at 321, 94 S.Ct. at 2352, by assuming without consideration of producers’ costs that the market price of gas in unregulated markets is a “just and reasonable” one. As recently as this term the Supreme Court spelled out to the Commission that in “subjecting producers to regulation because of anticompetitive conditions in the industry, Congress could not have assumed that ‘just and reasonable’ rates could conclusively be determined by reference to market price.” FPC v. Texaco, Inc., supra, 417 U.S. at 399, 94 S.Ct. at 2327. In this case the Commission could not base a determination that Mitchell’s 30.25^ per Mcf rate for new and old gas was just and reasonable solely on a comparison of this rate with alternative gas prices such as those in the unregulated intrastate gas market. Such a “what the market will bear” approach is simply inconsistent with the Commission’s regulatory trust.

We perceive no reason why the special relief provisions in the Commission’s area rate orders cannot be utilized to encourage needed gas exploration. But when the Commission permits an individual producer to depart from an area rate structure which has been developed with reference to average area-wide costs to provide producers a necessary but not excessive profit incentive for gas exploration, its regulatory trust requires it to give complete consideration to that producer’s individual costs in order to ensure that the producer’s profit margin is not thereby raised to an unreasonable level.

The Commission did not give such consideration to the profits Mitchell will obtain from Natural’s consumers under a 30.250 per Mcf rate. The Commission’s discussion of the estimate of the excess of 1973 through 1977 revenues from its rate increase over the costs of the new Wise County drilling surely did not constitute such consideration. As stressed by Chairman Nassikas in his dissent, the new wells drilled in the Wise County region are expected to produce gas for many years beyond 1977 and the revenues, as well as any costs, from the late years of production need to be taken into account on a discounted basis in order to calculate the incremental profit which Mitchell will obtain from the settlement agreement. In addition, the Commission should have obtained past cost data from Mitchell in order to compute the profits which it had been obtaining at its old rate level on its old flowing gas. Because area rates are computed with reference to average costs, it is very possible that these profits were much greater than the average considered reasonable by the Commission for the Other Southwest. Area. Mitchell’s incremental profits need to be supplemented with this old profit margin to compute its new profit expectations. Only incremental profits would, of course, be directly relevant to Mitchell’s decision whether to invest in additional drilling, but the Commission must consider Mitchell’s overall profits to determine the general reasonableness of the rate increase. If Mitchell’s profit returns on old flowing gas at its old rate were already above the area average, the Commission might decide that the rate on the newly drilled gas, but not that on the old flowing gas, should be increased so that Mitchell, rather than Natural’s ratepaying customers, would bear what seemed the minimal risk of the new drilling being unsuccessful..

A higher overall profit return derived from lower than average costs on the old flowing gas should also be relevant to the Commission’s consideration of whether Mitchell’s quid pro quo for its rate increase — its exploration commitment — is adequate. Higher profit levels would demand a greater gas exploration commitment, and greater support for Chairman Nassikas’ position that all gas found by such a commitment be dedicated to the interstate market.

Ill

We remand this case to the Commission for reconsideration of the reasonableness of Mitchell’s settlement agreement in light of a full evidentiary record on Mitchell’s costs of production in the Wise County contract region and the profits which it can expect to obtain over the life of its new and old wells in this region. Inasmuch as Mitchell is now in its second year of drilling toward its 125-well Wise County region commitment and the success ratio of this drilling can be determined, the Commission can make accurate estimates of the amount of gas Mitchell will be able to sell as a result of its exploratory investments.

It is for the Commission to determine that rate level which is necessary to induce Mitchell to complete its drilling in the Wise County region, and it is for the Commission to determine whether the overall profits which Mitchell would obtain at that level are reasonable in light of any commitments to provide further gas for the interstate market. If made within a “zone of reasonableness,” we are to respect those determinations as a balancing of public interests within the Commission’s discretion.- However, these determinations cannot be made without full consideration of Mitchell’s costs. Absent such a full consideration, we cannot conclude that the Commission’s order granting Mitchell special relief from the area rates is “supported by substantial evidence.”

Remanded for further proceedings consistent with this opinion.

MacKINNON, Circuit Judge

(concurring) :

I concur in the foregoing opinion except as to pai’t of footnote 2. It is my opinion that since Congressman Macdon-ald is clearly not aggrieved by the order, this court lacks jurisdiction over his petition under section 19(b) of the Natural Gas Act, 15 U.S.C. § 717r(b). It is unnecessary to consider the further question whether his petition would satisfy the case or controversy requirement of Article III of the Constitution.

      . Opinion No. 649, Feb. 21, 1973, Joint Appendix Vol. I at 10; Opinion No. 649-A Denying Rehearing, June 25, 1973, JA Vol. I at 62.

      . Petitioner Congressman Macdonald is a member of the House Committee on Interstate and Foreign Commerce and is chairman of that Committee’s Subcommittee on Communications and Power. Petitioner Congressman Yates represents constituents served by the gas for which the rate increase was approved and himself uses this gas. Inasmuch as Congressman Macdonald is not directly and personally aggrieved by the orders, there may be some question concerning his standing to bring this appeal. However, this issue was not raised by the Government and inasmuch as Congressman Yates is clearly aggrieved we need not reach it.
      The congressmen petitioned to intervene in the Commission’s consideration of the rate increase in order to obtain a rehearing of the Commission’s initial order approving the increase. The Commission granted the intervention motion but denied the rehearing. Opinion No. 649-A, supra note 1, JA Vol. I at 62.

      . Mobil Oil Corp. v. FPC, 417 U.S. 283, 94 S.Ct. 2328, 41 L.Ed.2d 72, (1974); FPC v. Texaco, Inc., 417 U.S. 380, 94 S.Ct. 2315, 41 L.Ed.2d 141, (1974).

      . In addition to attacking the substantive adequacy of the orders approving the rate increase, petitioners contend the Commission violated several of its own regulations in the course of the proceedings which produced these orders. See brief for petitioners at 22-24. Given our view of the substantive attack on the orders, it is not necessary to reacli consideration of the alleged procedural defects.

      . Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954).

      . Under § 5(a) of the Natural Gas Act, 15 U.S.C. § 717d(a) (1970), the Commission may at any time conduct an investigation into whether a given rate is “just and reasonable.” See also 15 U.S.C. § 717c (e) (1970).

      . See City of Detroit v. FPC, 97 U.S.App.D.C. 260, 263, 230 F.2d 810, 813 (1955), cert. denied, 352 U.S. 829 (1956); Breyer & MacAvoy, The Natural Gas Shortage and the Regulation of Natural Gas Producers, 86 Harv.L.Rev. 941, 952-953 (1973).

      . tSee Statement of General Policy, No. 61-1, 24 FPO 818 (I960).

      . Other Southwest Area Rate Proceeding, 46 FPC 900, 920 (1970), affirmed, 5 Cir., 484 F.2d 469 (1973), cert. denied, 417 U.S. 973, 94 S.Ct. 3180, 41 L.Ed.2d 1144 (1974).

      . The special relief provisions have been codified for each area. For the Other Southwest Area, codification is at 18 O.F.R. § 154.109a(e) (1973).

      . 41 FPC 378 (1969); 42 FPC 1110 (1969).

      . Southern Louisiana Area Rate Proceeding, 46 FPC 86 (1971), affirmed, sub nom. Placid Oil Co. v. FPC, 5 Cir., 483 F.2d 880 (1973), affirmed, sub nom. Mobil Oil Corp. v. FPC, 417 U.S. 283, 94 S.Ct. 2328, 41 L.Ed.2d 72 (1974).

      . 44 FPC 761, 781-783 (1970), affirmed, sub nom. State of California v. FPC, 9 Cir., 466 F.2d 974 (1972).

      . 45 FPC 674, 687-689, 709-711 (1970), reversed, sub nom. Public Service Com’n v. FPC, 159 U.S.App.D.C. 172, 487 F.2d 1043 (1973), vacated, 417 U.S. 964, 94 S.Ct. 3167, 41 L.Ed.2d 1136 (1974).

      . Id. at 709.

      . In re Other Southwest Area Bate Case (OSWA 1), 5 Cir., 484 F.2d 469, 475-476 (1973).

      . 46 FPC 900, 912 (1971).

      . The rates for gathered gas produced in the Other Southwest sub-area of which Wise County is a part pursuant to contracts dated before Oct. 1, 1968 is 19.70 per Mcf. See note 19 infra. The rate for ungatliered gas in this sub-area, Texas District 9, is 1.50 lower, 18.20 per Mcf. 46 FPC 900, 921 & n. 2 (1971). Mitchell sells a portion of un-gatliered gas as well as a portion of gathered gas. The Commission computed the 18.8590 per Mcf figure taking into account these proportions*. The rate for gathered gas produced in Texas District 9 pursuant to a contract dated after Oct. 1, 1968 was fixed at 240 per Mcf, id. at 914-915; it is 1.50 lower if the gas is ungatliered, id. at 919. The Commission apparently assumed that, because the contract between Mitchell and Natural was dated in 1954, any new well gas sold to Natural by Mitchell under an amendment to their contract would be limited by the lower 19.70 and 18.20 ceilings. See ,TA Vol. I at 20.

      . The Other Southwest Area is subdivided into several districts or sub-areas. This subdivision is necessary because the Other Southwest Area, unlike the other major production areas, is not homogeneous in its geology and markets. See 46 FPC 900, 907 (1973).

      . Before its request to increase its rates to 30.250 per Mcf Mitchell was charging less under its contract with Natural than the area ceilings. Mitchell’s pre-request charge was 17.6250 per Mcf.

      . We are not influenced by Natural’s acquiescence in the settlement agreement. As stated by Chairman Xassikas in dissenting from the Commission’s order below :
      Natural has neither the incentive to bargain for the lowest reasonable price to the consumer nor the power to do so. Natural can flow-through any increase in its purchased gas costs to its customers. When a pipeline is in curtailment, as Natural is, that buyer has little bargaining leverage. * * * It is difficult to conceive of any “arms-length bargaining” under these circumstances which only adds a greater responsibility to the Commission to examine the justness and reasonableness of the proposed rate.
      ,TA Vol. I at 36.

      . Mitchell did not agree to expend in the next five years $16.5 million more than it had theretofore planned to spend or than it had invested in gas and oil exploration during the previous five-year period. In 1972 Mitchell expended $7 million in exploratory efforts. In 1971 $3.5 million was spent. ,TA Vol. II at 37. The $16.5 million five-year figure is, of course, equivalent to only $3.3 million annually.

      . Dissenting Chairman Xassikas challenged the Commission’s reasoning on this point. The Commission compared the 30.250 per Mcf rate with a 33.60 per Mcf rate paid by Natural for limited term purchases of intrastate gas and with the costs of nonconven-tional sources such as liquefied natural gas. JA Vol. I at 19. Chairman Xassikas stressed that the incremental price of the gas expected to be produced by the 125 wells in five years would actually be 50.40 per Mcf, rather than 30.250, because the price increases on the old flowing gas are really costs to the consumers of the new gas which would not have to be paid if this gas were obtained from an alternative source. JA Vol. I at 30. If less gas than expected is found by drilling the 125 wells, then the incremental gas which is found would, of course, be even more costly per Mcf. Chairman Nassikas compared the 50.4# rate with what was then the average price for intrastate gas from the region around Natural’s pipeline — 35#. See JA Vol. II at 14. Mitchell argues to this court, however, that the short-term sale price for intrastate gas available to Natural has escalated to 50# per Mcf (brief of intervenor Mitchell at 22), and the Commission in its order denying rehearing stressed that when the price increases on the old flowing gas are spread beyond five years over the productive life of the new wells the incremental cost of the new gas is reduced to 33# to 36# per Mcf. JA Vol. I at 71.

      . JA Vol. I at 23.

      . All parties agreed that, in addition to the almost $9 million estimated to be necessary to drill the 125 wells, Mitchell would be required to expend $2 million over the five-year period for the compression needed to maintain the Wise County field at its present level of deliverability. The Commission staff originally calculated that the rate increase and new Wise County region drilling would yield extra revenues of $18.7 million to Mitchell. .TA Vol. II at 110. The staff thus submitted an exhibit indicating that Mitchell would obtain extra estimated profits of $7.7 million from the new drilling ($18.7 million minus $9 million minus $2 million). Id. However, after Mitchell objected to this $7.7 million figure at a settlement conference, it was reduced to $3 million, allegedly to take into account ad valo-rem and severance taxes and an allocation of general corporate overhead. Noting that the taxes and corporate overhead could not account for a $4.7 million reduction, Chairman Nassikas found the record inadequate to support the $3 million rather than $7.7 million figure. ,TA Vol. I at 29 & n. 10.
      Petitioners question even the $7.7 million figure. They point out that Mitchell’s offer of settlement states that 30 Bcf jier year rather than the 21 Bcf per year used in the Commission’s calculation will be eligible for the 30.25# rate, and that this higher amount, would yield extra gross revenues of $24.7 million rather than $18.7 million to Mitchell over the five-year period. See brief for petitioners at 8 and ,TA Vol. II at 93.

      . The Commission also stated that. Mitchell risked an investment of $11 million in order to obtain a possible $3 million profit. The $11 million figure equals the $9 million thought necessary to drill the 125 new wells plus $2 million required to provide for the compression to maintain the present deliver-ability of the Wise County region. See note 25 supra. The risk is that of finding no gas from the drilling. This is a risk which must have been minimal if the unquestioned studies in the record which “reflect that there are substantial quantities of gas in place underlying the Mitchell acreage” are to be given the respect reposed in them by the Commission in stressing the importance of encouraging further development of the field. Opinion No. 649, supra note 1, JA Vol. I at 10, 19. And it is a risk which surely has not materialized; Mitchell reported at oral argument, that, thus far it has in fact been even somewhat more successful in its drilling efforts than was anticipated.
      The Commission’s risk argument was in any case completely deflated by the dissent of Chairman Nassikas. lie pointed out that, even if Mitchell’s drilling was completely unsuccessful, the rate increase on the gas flowing from the old wells would yield the producer $7.6 million in additional revenues. He also emphasized that the costs of dry holes would be less than the costs of successful wells. lie cited testimony indicating Mitchell would need to expend only $7.5 million for drilling 125 dry holes. JA Vol. I at 32 & n. 24. Mitchell thus would obtain revenues from the rate increase sufficient to pay for the new Wise County region drilling even if that drilling proved completely unsuccessful.
      To be sure, Mitchell would still be committed to investing $9 million more over a five-year period in oil or gas exploration. But this investment can be made where Mitchell believes the chances of discovery of oil oi-gas are best, and per annum it is substantially less than the exploration investment Mitchell has made over the past several years. See note 22 supra. The Commission éame close to suggesting at oral argument that any money reinvested in gas exploration should not be considered profit. Such a suggestion would, of course, be specious. Money placed in a capital investment is not necessarily lost to the investor; Mitchell, for example, will own any wells which it drills and will be entitled to a fair return on their costs. Old profits obtained from consumers provide the capital for new profits.

      . JA Vol. I at 33-34. Chairman Nassikas assumed in computing the 20% return that Mitchell would obtain a 100% working interest in the wells it drilled.

      . JA Vol. I at 34-36.

      . The substantial evidence standard for appellate review of Commission orders derives from § 19(b) of the Natural Gas Act, 15 U. S.C. § 717r(b) (1970).

      . Mobil Oil Corp. v. FPC, supra note 3, 417 U.S. at 320-321, 94 S.Ct. at 2351-2352.

      . As the original § 7(c) provided, it was “the intention of Congress that natural gas shall be sold in interstate commerce for resale for ultimate public consumption for domestic, commercial, industrial, or any other use at the lowest possible reasonable rate consistent with the maintenance of adequate service in the public interest.” 52 Stat. 825. The Act was so framed as to afford consumers a complete, permanent and effective bond of protection from excessive rates and charges.
      Atlantic Refining Co. v. Public Service Com’n (CATCO), 360 U.S. 378, 388, 79 S.Ct. 1246, 3 L.Ed.2d 1312 (1959).

      . See also City of Chicago v. FPC, 147 U.S.App.D.C. 312, 349-350, 458 F.2d 731, 768-769, cert. denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1971); United Gas Improvement Co. v. FPC, 5 Cir., 290 F.2d 133, 135-136, cert. denied, 368 U.S. 823, 82 S.Ct. 41, 7 L.Ed.2d 27 (1961).

      . Dicta in Placid Oil Co. v. FPC, supra note 12, 483 F.2d at 913, and OSWA I, supra note 16, 484 F.2d at 480 n. 22, referring to the opinions challenged here as a possible application of the Commission’s special relief procedure in this time of gas shortage constitute at most a 5th Circuit concurrence in this view.

      . We note that the Commission’s exclusive focus on the 1973 through 1977 period for computation of Mitchell’s incremental profits was inconsistent with its consideration of the productive life of the new wells for purposes of computing the incremental price of the new gas. (fee note 23 supra.

      . The Commission seems to have settled upon a 15% rate of return for producers as reasonable, dee Other Southwest Area Proceeding, supra note 9, 46 FPC at 913 n. 15.

      . dee note 26 supra.

      . Though we do not and need not rest our disposition on this point, like Chairman Xas-sikas we are troubled by the Commission’s failure to require Mitchell to invest, in exploration for gas to he dedicated to the interstate market all of its Wise County region revenues in excess of those it would have obtained at the area rate. The excess revenues, at least over the productive life of the wells and perhaps over five years, see note 25 supra, will he greater than Mitchell’s $16.5 million exploration commitment. Moreover, $7.5 million of the $16.5 million may be directed toward exploration for gas or oil which may never reach the interstate market. A requirement that all the excess revenues be employed to ease the interstate gas shortage would have given symmetry to the purpose of the grant of relief and Mitchell’s quid pro quo to obtain the relief. The symmetry would have been perfected had the Commission given preemptive rights on the gas obtained from the exploration to Natural whose ratepaying consumers effectively funded the new drilling.

      . The dispute between petitioners and the Commission as to the quantities of gas which Mitchell will be able to sell at the increased rate, see note 25 supra, should he able to be resolved. The Commission also should fully explain why it reduced its original $7.7 million incremental five-year profit calculation to $3 million, dee id. It should specify the apportioned corporate overhead and severance and ad valorem tax costs.

      . If the Commission decides upon reconsideration that only a rate lower than 30.25^ per Mof is justified, it, should consider the equities of ordering a refund to Natural of excess revenues already collected to be passed through to the ultimate ratepaying consumers.

      . Permian Basin Area Kate Cases, 390 U.S. 747, 707, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968).

      . A Commission decision that extra profits are justified by a commitment to explore for more gas would be more clearly within a "zone of reasonableness” if all the extra profits were required to be invested in exploration which would benefit the ratepaying consumers who provided the extra profits or at least other consumers who purchase from the interstate market. Idee note 37 supra. If such a requirement is not placed on a producer obtaining special relief in a case such as Mitchell’s, the Commission should at. least fully explain why. The Commission should also consider the exploratory investments which the producer has made over the past few years, see note 22 supra, to determine whether its commitment to do further exploration is really a quid pro quo. The Commission should at least attempt to make the exploratory commitment an incremental one.

      . Idee the. language quoted from Permian Basin, supra note 40, in text at note 29 supra.

      . 35 U.S.C. § 717r(b).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    UNITED STATES of America, Appellant, v. ASSOCIATED TRANSPORT, INC., et al.
    No. 72-1946.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Dec. 18, 1973.
    Decided Oct. 1, 1974.

      Eloise E. Davies, Atty., Dept, of Justice, with whom Harold H. Titus, Jr., U. S. Atty. at the time the brief was filed, and Walter H. Fleischer, Atty., Dept, of Justice, were on the brief, for appellant. Morton Hollander and Thomas J. Press, Attys., Dept, of Justice, also entered appearances for appellant.
    Bryce Rea, Jr., Washington, D. C., for appellees.
    Richard J. Hardy, Washington, D. C., filed a brief on behalf of Mohasco Industries, Inc. as amicus curiae urging reversal.
    Before WRIGHT, ROBINSON and MacKINNON, Circuit Judges.
   PER CURIAM:

The United States as a shipper sued the defendant motor carriers in the District Court for restitution of excessive freight charges on furniture shipments made under published tariff rates which the Interstate Commerce Commission, following a formal investigation undertaken sua sponte, ultimately ordered set aside as not shown to be just and reasonable. The issue on this appeal is whether a shipper can sue an interstate motor common carrier for restitution of the excess of freight charges over just and reasonable rates, particularly in view of the express provision now made by the Motor Carrier Act of a remedy by way of reparations. The focal inquiry is whether the saving clause of the Act permits the judicially-conceived remedy of restitution to be used as the vehicle for recovery of such an excess. Our answer is in the negative.

In T. I. M. E., Inc. v. United States, the Supreme Court concluded that recognition, by virtue of the saving clause, of the common-law right to reparations would be incompatible with the statutory scheme. While the Court’s opinion does not treat restitution, the discussion leaves no doubt that restitution would have met the same fate. In 1965, however, following the decision in T. I. M. E., Congress amended the Act to enable an aggrieved shipper to recover reparations for unreasonable rates. Although this remedy was readily available here, the Government ignored it in favor of a nonstatutory bid for restitution.

In support of its position on restitution, the Government relies primarily upon Middlewest Motor Freight Bureau v. United States. There, after the Interstate Commerce Commission suspended — pending investigation — increased rates filed by truckers, the latter secured a temporary restraining order barring the suspension, thus enabling the higher rates to go into effect. The restraining order was later dissolved, but the District Court rejected the Government’s plea for restitution for the higher freight charges it had paid while the order was in force. On appeal, the Eighth Circuit ruled that restitution should be allowed.

Nonetheless, a suit for restitution cannot be maintained for the purpose envisioned in the case at bar. In Middle-west, the carriers sought and obtained a judicial order restraining the Commission’s suspension order, and the courts have traditionally awarded restitution upon dissolution of injunctive orders later found to be improvident. No inconsistency with provisions of the Act or with the administrative process it mandates was promoted by allowance of restitution for rates higher than those which could have been charged had the Commission’s suspension order gone into effect. As the court stated, restitution is the “proper remedy to return the parties to the position they would have been in had the Commission’s order not been judicially restrained.”

By contrast, in our case restoration to the financial status quo is sought because the Commission refused to suspend the rate increases when filed by the carriers. It left the rates in effect while it proceeded with an investigation, and almost three years later it held that the rates had not been shown to be just and reasonable. The problem was thus generated by Commission — within the administrative process prescribed by the Act — rather than by judicial action outside of that process. And although the Act declares excessive rates to be unlawful, Congress has now provided a procedure designed specifically for rectification of such excesses. By virtue of the 1965 amendment, a shipper may challenge a carrier’s rates before the Commission and, if successful, may recover reparations in court. The frame and preamendment history of the Motor Carrier Act, as T. I. M. E. explains, evince a congressional intent to secure the reasonableness of rates through the administrative processes it prescribes, and to exclude liability of motor carriers to shippers on account of excessive rate-charging in the past. By the 1965 amendment, Congress has relented somewhat, but only to the extent of admitting the current reparations procedure.

There are fundamental differences, both in theory and in practice, between the doctrines of reparations and restitution as applied in situations involving excessive rates. In actions for reparations, shippers individually seek, as of right, damages measured by the exact difference between the charges paid and the just and reasonable rates. Because any damages awarded are liquidated, it is necessary to know precisely what the just and reasonable rate was, and that determination can be made only by the regulatory agency. Consequently, before a court can order reparations in favor of a shipper, the Commission must ascertain the just and reasonable rate. Moreover, actions for reparations, which are “action[s] at law,” must be brought within specified periods of time.

On the other hand, restitution rests essentially on the doctrine of unjust enrichment. In rate cases, restitution ordinarily involves a refund for the benefit of all consumers subjected to the excessive rate, and the refund may be less than the amount of the excess for all consumers. So it is that restitution may become available once it is known that the rate under scrutiny was excessive,, without need to know just what a reasonable rate would have been. And it would appear that a suit for restitution becomes time-barred, if at all, only as a result of laches.

These differences do not assist the Government, but rather accentuate its problem in the instant case. The Government bypassed the prescribed procedure for seeking reparations and brought instead what it considers a suit for restitution. Yet the Government demands exact damages, assumes the just and reasonable rate. and remains insensitive to time limitations. In a word, the Government’s approach seeks the best of both worlds.

As Hewitt-Robins demonstrates, there are undoubtedly instances wherein the saving clause opens the door to restitution for violations of the Motor Carrier Act which are unrelated to the inherent reasonableness of rates. But, in our view, to allow a shipper to substitute the nonstatutory remedy of restitution for the statutory mechanism of reparations is to insult the policy and scheme of the Act as interpreted in T. I. M. E.

Affirmed.

      . 49 U.S.C. § 304a(2) (1970). It should be noted that in cases wherein excessive rate-charging has been rectified by the process of restitution, a remedy leading to reparations lias been conspicuously absent.

      . 49U.S.C. § 316(j) (1970).

      . B’or answers from other appellate courts see Mohasco Industries, Inc. v. Acme Fast Freight, Inc., 491 F.2d 1082 (5th Cir. 1974); S. S. Kresge Co. v. A & B Transfer, Inc., 488 F.2d 894 (6th Cir., decided December 5, 1973).

      . 359 U.S. 464, 79 S.Ct. 904, 3 L.Ed.2d 952 (1959).

      . See id. at 472 n. 12, 79 S.Ct. 904 and authorities there cited.

      . Id. at 468-480, 79 S.Ct. 904.

      . Id.

      . 49 U.S.C. § 304a (2), (5) (1970).

      . 433 F.2d 212 (8th Cir. 1970).

      . E. g., Arkadelphia Co. v. St. Louis S. W. Ry., 249 U.S. 134, 145, 39 S.Ct. 237, 63 L.Ed. 517 (1935).

      . Middlewest Motor Freight Bureau v. United States, supra note 9, 433 F.2d at 244.

      . 49 U.S.C. § 316(d) (1970). This provision does not, however, create a cause of action for allegedly unreasonable past rates. T. I. M. E., Inc. v. United States, supra note 4, 359 U.S. at 468, 79 S.Ct. 904. See also Montana-Dakota Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 251, 71 S.Ct. 692, 95 L.Ed. 912 (1951).

      . 49 U.S.C. § 304a (2), (5) (1970).

      . Id. See also Informal Pi’ocedure for Determining Motor Carrier and Freight Forwarder Reparation, 355 I.C.C. 403, 406-07 (1969).

      . T. I. M. E., Inc. v. United States, supra note 4, 359 U.S. at 468, 79 S.Ct. 904.

      . See 49 U.S.C. § 304a(5) (1970).

      . T. I. M. E., Inc. v. United States, supra note 4, 359 U.S. at 473, 79 S.Ct. 904; Texas & Pac. R. R. v. Abilene Cotton Oil Co., 204 U.S. 426, 448, 27 S.Ct. 350, 51 L.Ed. 553 (1907).

      . See 49 U.S.C. § 304a (5) (1970) ; Informal Procedure for Determining Motor Carrier and Freight Forwarder Reparation, supra note 14, 335 I.C.C. at 413.

      . 49 U.S.C. § 304a(2) (1970).

      . 49 U.S.C. §§ 304a(2), (8) (1970).

      . E. g., Williams v. Washington Metropolitan Area Transit Comm’n, 134 U.S.App.D.C. 342, 364, 415 F.2d 922, 944 (1968), cert. denied, 393 U.S. 1081, 89 S.Ct. 860, 21 L.Ed.2d 773 (1969).

      . Id.

      . See id. at 361-367, 415 F.2d at 941-947.

      . In the rate investigation preceding the Government’s suit, the Commission did not determine what the just and reasonable rate was, but only that the carriers’ filed rates had not been proven to be just and reasonable. One of the controversies on this appeal is whether that is tantamount to a determination that the immediately preexisting rates were the just and reasonable rates.

      . Hewitt-Robins, Inc. v. Eastern Freight-Ways, Inc., 371 U.S. 84, 83 S.Ct. 157, 9 L.Ed.2d 142 (1962).

      . See also Pensick & Gordon, Inc. v. California Motor Express, Ltd., 302 F.2d 391, 394 (9th Cir. 1962), following remand, 323 F.2d 769, 771 (1963), cert. denied, 375 U.S. 984, 84 S.Ct. 518, 11 L.Ed.2d 472 (1964).

      . One facet of the inconsistency unavoidable in recognizing reparations and restitution as side-by-side remedies becomes apparent when it is realized that, with respect to a single rate which has been impugned, some shippers might sue for reparations while others might prefer to invoke restitution.


author: MacKINNON, Circuit Judge:

text:
    S & G INVESTMENT INC. et al., Appellants, v. HOME FEDERAL SAVINGS AND LOAN ASSOCIATION et al.
    No. 72-1625.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Jan. 29, 1974.
    Decided Oct. 3, 1974.

      Hershel Shanks, Washington, D. C., with whom Henry H. Glassie, Washington, D. C., was on the brief, for appellants.
    David S. Scrivener, Washington, D. C. , with whom Marshall P. Johnson, Washington, D. C., was on the brief for appellee Home Federal Savings & Loan Assn.
    Herman Miller, Washington, D. C., was on the brief, for appellee Scheve.
    Jacob C. Lish, Washington, D. C., entered an appearance for appellee Bernstein.
    Charles Sumner Brown, Washington, D. C., entered an appearance for appel-lees Francies.
    Before LEVENTHAL, MacKINNON and WILKEY, Circuit Judges.
   MacKINNON, Circuit Judge:

Appellants S & G Investment, Inc., a Maryland corporation (hereafter “S & G”), brought the instant action as the owner of a residential row brick house at 751-12th Street, S.E., Washington, D.C., which was encumbered by a first deed of trust securing the payment of a note in the original amount of $9,250 held and owned at the time of foreclosure by the Home Federal Savings and Loan Association (hereafter “Home Federal”). The suit is against Home Federal- and the trustees named in the deed of trust and charges a breach of trust by the trustees of their fiduciary duties in the conduct of the sale foreclosing the lien securing the note held by Home Federal. The primary request for relief is damages against the trustees but the complaint also seeks to have the foreclosure set aside. A third claim alleges that the due date of the unpaid principal of the note was not properly accelerated and that the trustees erred in applying the proceeds of the foreclosure sale to satisfy the principal amount of the indebtedness secured by the first deed of trust. After a very careful analysis of the facts and the law, we are unable to find controlling merit in any of S & G’s contentions and hence affirm the decision and judgment of the District Court.

I

On October 26, 1969, appellant S & G, following earlier delinquencies which had been corrected, became three months delinquent in the monthly payments due on a note secured by first deed of trust on the row brick house above referred to. On October 27, 1969, Home Federal, the then owner and holder of the secured note, sent appellant a letter and notice by certified mail, return receipt requested, at the Maryland address it had been given by S & G, stating that Home Federal intended to foreclose the loan by trustee sale on December 2, 1969. The notice of foreclosure sale required by the statute (D.C. Code § 45-615(b)) was also sent to the Recorder of Deeds of the District of Columbia and a copy of said notice was enclosed in the letter to S & G.

The trustees, pursuant to the power of sale contained in the deed of trust and in conformance with the procedure customary in the District of Columbia, at the request of Home Federal, thereafter advertised the forthcoming foreclosure sale in customary form by due and proper notice in the Washington STAR. The advertisement appeared on five separate days in the editions published on November 20, 22, 25 and 28, and December 1, 1969. It is common knowledge that the STAR has a daily circulation in excess of 400,000 and reaches all areas of the Washington Metropolitan Area. Thus over two million separate notices of the forthcoming foreclosure sale were printed, published and distributed to the public in the Washington area prior to the foreclosure sale.

The foreclosure sale took place as scheduled on December 2, 1969, when the property was sold to an innocent purchaser (Seheve). Thereafter he rehabilitated and repaired the property to a substantial extent and later sold it again to another innocent purchaser. Then, just over one year after the foreclosure sale, on December 2, 1970, appellants started this action seeking to set aside the foreclosure sale, or to apply the proceeds of the sale in a different manner, or to obtain a judgment in damages.

Appellants’ principal claim is that the trustees under the deed of trust violated their fiduciary duty in not attempting to give personal notice of the foreclosure sale to both the owner of the property (S & G) and the holder of the second trust (Davis Mortgage Company). So far as notice to the owner is concerned, Home Federal fully complied with the statute and there is no reason why the trustees should not be permitted to rely upon such compliance.

As for the claim that the trustees, in addition to the published notice in the newspaper, were required to give personal notice of the foreclosure sale to the holder of the second trust, this is unsupportable as a legal matter. Such notice has never before been required in the District of Columbia and the decided cases are generally to the contrary. While the holder of a second trust in some instances might be a likely bidder at a foreclosure sale under the first trust, the law generally considers that the burden is on the holder of the second trust to keep informed of the status of the first lien. If the holder of the second trust desires notice of a foreclosure sale, he usually so notifies the trustees. This the Davis Mortgage Company, the second lienor, failed to do, even though it was in the investment business and presumably knowledgeable in the field. It also had some indication of the precarious financial condition of S & G as its own note, originally for 90 days, had been frequently extended after payment of interest only, with the last extension being granted on November 13, 1969, while the instant foreclosure was in progress.

Moreover, it is completely erroneous for appellants to argue that notice was not given to the holders of the first and second trusts. Both were given constructive notice by virtue of the publication of the customary form of advertisement of the foreclosure sale in the two million copies of the newspaper printed and distributed by the Washington STAR. Constructive notice is the equivalent of actual notice. In the District of Columbia, publication of a newspaper advertisement is the usual and customary method of giving notice of a foreclosure sale. Such advertisement satisfies the statute and the terms of the deed of trust which provided that the trustees have power

upon such default, and by request of the Association [Home Federal] to sell said realty, or any part thereof, at public auction in such manner, at such time and place, upon such terms and conditions, and after such previous advertisement as the said trustees may deem best for the interests of all concerned ....

It would have been better if the owner had actually received the additional personal notice that was properly mailed to 5 & G, but the failure of S & G to receive it was due partly to its own dereliction and not entirely to Home Federal or to the trustees. Home Federal literally complied with the statutory requirements when it mailed the required letter and notice. In full compliance with the statute, the letter was sent to the last known address, correctly addressed to S 6 G care of Mike Golob Association, Inc. The address is in nearby Maryland and the statute required that the notice be mailed to the address indicated on the envelope. The letter was mailed on October 27, a Monday. This was in sufficient time to have been delivered before Saturday, November 1. S & G moved on November 1. However, the letter was returned stamped “Unclaimed” and a date of “November 14, 1969” was also stamped on the envelope. Also written on the face of the envelope was “NC 10/29/6 3192 Whiting.” This notation was not explained.

The reason for the return of the letter is otherwise unexplained and we need not speculate on the reasons since the letter was properly mailed to the proper address as the statute required. S & G had received two prior' letters at the same address, the latest on August 1, 1969, calling attention to its delinquency in payments, and S & G had not notified Home Federal of any change of address.

The claim now by S & G that the noteholder (Home Federal) and the trustees were somehow deficient in their duties by not being successful in bringing personal notice to S & G overlooks certain facts. First, S & G never notified Home Federal or the trustee of its change of address. Second, S & G was in serious default in its payments, was in the real estate investment business itself and knew that foreclosure was the ordinary consequence of such default. Third, S & G also was on notice that the statute required the lender to send notice of foreclosure to it at its last known address.

It must be recognized that D.C. Code § 45-615 (b) requires the noteholder to mail notice of the sale to the owner at his last known address. Such notice was mailed. Appellants contend that, in addition, the trustees must at a minimum satisfy themselves that actual notice was given or that reasonable steps were taken to give personal notice. Such would be an erroneous interpretation of the statute and of District law as it would require both the trustees and the noteholder to be responsible for giving such notice. To require both parties to see that notice is given is an absurd interpretation of the law and it is clear that section 615(b) does not require it. The fact that the statute was enacted at all indicates that Congress considered that prior thereto there was no obligation on any person in the District of Columbia to give personal notice to the owner, much less to junior lienors. Congress would not have enacted a statute to require noteholders to give notice to owners if trustees were already required to give notice.

As to the interpretation of the statute, it was brought out at the congressional hearings preceding its enactment into law in 1968 that:

Under present practice [in the District of Columbia] a deed of trust may be foreclosed by the trustees without any prior notice to the unwary homeowner.

Senate hearings, p. 41.

Congress then proceeded to consider the foreclosure procedures in the District of Columbia and after evaluating various proposals it enacted D.C.Code § 45-615(b) which required only that the noteholder should mail notice to the owner and to the Commissioner of the District. No other personal notice to the owner or any subordinate lienor was required. Congress knew from the testimony at the hearings that the prior law did not require personal notice to the owner, and junior lienors would be even less entitled to such notice. Thus, to accede to appellants’ contentions would completely change the law in the District of Columbia. Even if most creditors do give personal notice to defaulting debtors, and even to junior lien-ors in some instances, the validity of the foreclosure and the title conveyed does not depend upon such additional notice. For a great many years in the District of Columbia, the foreclosure of deeds of trust under the power of sale therein has been based upon publicly published advertisement. To now change the law could be upsetting to many titles to real property.

Of course, there are wide variations in the foreclosure laws of the various states, but in the absence of a specific contractual or statutory directive, it is not generally required that a creditor give personal notice to a defaulting debtor prior to foreclosure, or to the holder of a second trust. Foreclosure jurisdiction in such cases usually rests on due and proper public advertisement. The statute here requires the noteholder to mail notice to the owner. For the court also to rule, in effect, that both the noteholder and the trustees must be responsible for notice to the owner, to use appellants’ phrase, “would stand the statute on its end.” There is absolutely no reason why the trustees were not perfectly entitled to rely upon the fact that Home Federal would comply with the statute, as it did, by mailing “written notice, by certified mail return receipt requested, of said sale to the owner of the real property encumbered by said deed of trust ... at his last known address, with a copy of said notice being sent to the Commissioner of the District of Columbia ... at least 30 days in advance of the date of said sale.” D.C.Code § 45-615(b).

Appellants’ arguments also overlook the fact that as a practical matter the statutes in the District of Columbia provide that in “actions for foreclosure of . deeds of trust” publication may be substituted for personal service of process upon nonresidents. D.C.Code § 13-336. Maryland, from which comes much of our jurisprudence in such matters, recognized such constructive notice as far back as 1794. 2 Laws of Maryland (1800) (Kitty), November, 1794, ch. LX, See. IX. S & G was a Maryland corporation, at all times had its corporate residence in Maryland and thus was a nonresident of the District of Columbia. So as a matter of practical equity, S & G not only was mailed the notice required by the statute, in the manner required by the statute, but also received by publication the full constructive notice of the foreclosure sale that the statute provided for it as a nonresident.

Appellants suggest that Home Federal or the trustees should have given notice by telephone. This is a novel suggestion in property law — to foreclose mortgages by telephone notice. It is submitted that the trustees were entitled to rely upon what is more usual — service by mailing and by publication, which satisfied the statute, the law and the terms of the deed of trust.

II

The real burr in appellants’ contentions is their argument that the trustees were required to give personal notice to junior lienholders of the impending foreclosure sale. In this respect their theory is that a contrary construction of the trustees’ obligation would conflict with the recognized duty of a trustee to secure the highest price reasonably obtainable at sale. In support of such contention, appellants urge us to speculate that had the holders of the second trust been notified, “it is likely” that some additional funds would have been available to apply on the second trust. However, since appellees complied with the law, the terms of the trust deed and the statute, it is not open to us to require additional conduct and speculate as to what the results might have been. The force of appellants’ argument is for us to change the law. However the law is well stated that:

The person selling [trustee] is not, when the sale is otherwise regular, required to make any personal effort to procure the attendance of bidders.
. , It is sufficient if the public has been fully advised of the sale by legal publication of notice, and has the right and opportunity to attend and bid.

55 Am.Jur.2d Mortgages § 730 at pp. 662-63, citing Harlin v. Nation, 126 Mo. 97, 27 S.W. 330 (1893). As for the requirement that junior lienors must be served with notice of foreclosure sale of their security, that is not the law. Glenn on Mortgages discusses whether “junior encumbrancers” should be given the same personal notice as the mortgagor when the first lien is foreclosed. He favors such practice—

But the rule is otherwise under the cases. They clearly hold that the mortgagee need not give notice of sale to junior lienors or subsequent grantees, unless he is required so to do by the terms of the power or by statute. The mortgagee is under no duty to notify such a party; on the contrary, it is the latter’s business to keep informed as to what is going on with respect to the senior lien.

1 Glenn on Mortgages § 110.1 (1943) (emphasis added).

We thus adhere to the existing law in the District of Columbia and elsewhere that does not generally, except when obligated to do so by the statute, require notice to second lienors when the first lien is foreclosed by advertisement under a power of sale in a deed or mortgage.

It is also plain that when Congress enacted D.C.Code § 45-615(b), it rejected any requirement that holders of second deeds of trust be given personal notice. This was not an idle decision. Congress had before it in the 1968 Senate hearings on S. 2592 the whole panoply of abuses in the foreclosure of deeds of trust in the District of Columbia and it found that serious and flagrant abuses existed in foreclosures by holders of second deeds of trust (and third, etc.). They found no abuses in the foreclosure of first liens. The hearings disclosed that many second (and third, etc.) deeds of trust were given for merchandise purchases and home improvements in which the home owners were defrauded or were charged highly inflated prices. Leaving out the widespread instances where the junior liens were incurred as a result of high pressure salesmanship, fraud, misrepresentation, forgery, false completion certificates, shoddy work and inferior materials that were reflected in the Senate hearings, Congress also received testimony that in addition it was practically the uniform practice for the note and second deed of trust to be transferred quickly from the original contractor or vendor to a broker shortly after the transaction, then to be sold and assigned or transferred by him to a foreign or domestic financial institution and finally to end up in some subsidiary corporation. In some instances the note may be sold with recourse and in others without recourse, and the nature and incidence of the transfer were determinative of the identity of the second lienor. Numerous transfers make it difficult to locate and determine the true owner of the second trust, or third, etc. If personal notice were required to be given to junior lienors, we would be imposing on the holder of the prior encumbrance what in many instances would be a difficult burden.

Congress, when it reviewed the subject in 1968, decided not to impose any such requirement. To change the long established law by court decision could be upsetting to existing legal titles. The suggestion that the law be changed or modified to require that notice be given to junior lienors is such a sufficient departure from existing law and practice that it should not be done except by Congress or by the District of Columbia Court of Appeals as the authoritative expositor of local law in the District of Columbia.

Also, if holders of second deeds of trust were required to be notified, on the speculation that a higher price might result, the same logic would require trustees to notify those holding third deeds of trust, fourth deeds of trust, attaching creditors, mechanics lienholders, those with leasehold interests in the property, occupants of the property and owners of contiguous property. Where would the line be drawn? Speculatively, every one of such parties, under proper circumstances, might have an incentive to bid. And if we are going to speculate whether a trustee might have obtained a higher price by notifying any of such persons, will trustees next be required to hire a real estate agent to seek purchases from the general public, or to run an attractive picture of the property in the paper, or to paint the house, or repair it, or change the date of sale to what is alleged to be a more propitious time? Will it be proper to give notice to such people by telephone as appellants suggest should have been done here to the holder of the second lien? What if the creditor’s telephone call is not completed? What if he mistakenly dialed the wrong number? When legal titles to valuable property rights depend upon whether a person could prove that he dialed a correct telephone number in attempting to give notice to a subsequent lienor, property interests will hang by a narrow thread and title insurance costs will skyrocket, or the exceptions in title opinions will as a practical matter render them valueless against particular types of claims. In either event the necessitous borrower will be ill-served — either by higher costs or by less protection. Moreover, if we impose upon trustees the uncertain standards which appellants advocate, foreclosed home owners will suffer since prices received at foreclosure sales will be reduced to reflect the greater hazard to titles.

What appellants overlook is that deeds of trust in the District of Columbia are foreclosed in conformance with statute and recognized practice on the basis of mailed and published notice to the owner, that both such requirements were complied with and that the law here does not, under these circumstances, requise personal notice to holders of second deeds of trust. Long established rules affecting property rights should not be changed so precipitously, or in the manner appellants suggest, particularly after Congress refused to make such a change.

Ill

The circumstances as to the deficiency in price here are not such as to bring the case under our decisions which support setting aside a foreclosure sale because of the inadequacy of the price. Justice Stephens in Jackson v. Fuller, 66 App.D.C. 239, 85 F.2d 816 (1936) considered a case where the price received at the foreclosure sale was approximately 50% of the asserted assessed value of the property and about 38% of the asserted actual value. On such facts his opinion stated:

We cannot set aside a foreclosure sale on the basis of inadequacy of price alone, unless the inadequacy is such “as to shock the conscience and of itself suggest fraud or misconduct . .” [Citing cases] Neither percentage [50% or 38 %] can be held in respect of a forced sale shockingly inadequate. [W]here courts have held a sale price so low as to shock the conscience of the court, the discrepancy between the sale price and the value of the property has in most instances been much greater than in the instant case

66 App.D.C. at 241-242, 85 F.2d at 818-819. Appellants’ failure to base their claims on any shocking inadequacy in the foreclosure sale price is thus significant as indicating a deficiency in their cause of action. Monies advanced after the first deed of trust were used to remodel, restore and repair the premises that were in very poor condition. The extent of the work required, taken in conjunction with the relatively modest increase in market value, convinces us that this record does not make a showing of gross inequity that shocks the conscience.

IY

Appellants also contend that the trustees failed properly to apply the proceeds of the foreclosure sale because the monies they received were applied as if the entire principal indebtedness evidenced by the note secured by the first trust deed had been accelerated (Appellants’ Brief 43-51). In other words, appellants’ claim that payment of the entire unpaid principal amount of the note was not accelerated and that instead of applying the entire $8,025 received at the foreclosure sale to the satisfaction of the first lien, the trustees should have paid only $355.76 (three months’ delinquency) to the first trust holder (Appellants’ Brief, 50). If such construction were placed on the foreclosure, the holder of the first deed would give up about 96% of the security for his loan in return for payment of about 4%. His loan thereafter would be totally unsecured.

Appellants refer to the provision of the note which provides that in the event of default in any monthly installment payment, “then the whole of the unpaid balance of the indebtedness and any advances, plus interest, and other charges aforesaid, shall immediately become due and payable, at the option of said Association [Home Federal].” The deed of trust also provides “the Association [Home Federal] shall have the right to declare the entire remaining indebtedness . . . immediately due and payable.” On the strength of these provisions appellants contend that Home Federal did not properly accelerate the entire unpaid principal. However, there is a further provision in the deed of trust, which deals more specifically with distributing the proceeds of the foreclosure sale. It provides:

[U]pon compliance by the purchaser with the terms of sale, [the trustees are directed] to convey said property in fee simple and without liability of any purchaser to see to the application of purchase money, and from the proceeds of sale to pay the expenses thereof, including an auctioneer’s allowance, and a commission of five per-centum to the trustees, the expenses, if any, of correcting any irregularity which may appear in the title, counsel fees or other costs expended in and about the protection or execution of this trust including expense of obtaining possession, all money advanced for costs and expenses, or taxes or assessments, or insurance with interest thereon, and all taxes, general and special assessments due upon said land and premises at the time of sale, all other charges, advances, loans, expenses and fees herein provided for, then the whole amount then remaining unpaid of the principal of the said note, whether the same shall be due or not, and interest thereon to date of payment, it being agreed that said note shall, upon sale being made before the maturity of said note, be and become immediately payable at the election of the Association, and any net surplus to the borrower, or his heirs or assigns, upon surrender and delivery to the purchaser or purchasers, his or their heirs or assigns, possession of the aforesaid premises so sold and conveyed.

Additionally, we note that the letter which Home Federal sent to S & G by “certified mail, return receipt requested” stated that it had “initiated foreclosure action as evidenced by the enclosed notice” and that appellant was facing the “ultimate loss of [its] property.” Considering the value of the property, these remarks are some indication that upwards of $8,000 was being demanded and not $355. More importantly, however, enclosed with the letter of October 27, 1969, was a copy of the notice filed with the Recorder of Deeds on that date, as required by Public Law 90-566 (D.C.Code § 45-615). This was addressed to S & G and, inter alia, stated:

YOU ARE HEREBY NOTIFIED THAT IN ORDER TO SATISFY THE DEBT SECURED BY THE DEED OF TRUST, MORTGAGE OR OTHER SECURITY INSTRUMENT INDICATED BELOW THE REAL PROPERTY DESCRIBED BELOW WILL BE SOLD AT A FORECLOSURE SALE TO BE HELD ON OR AFTER DECEMBER 1, 1969. ******

Balance owed on the note: $7,510.46. This clearly indicated that the “Holder of the note: Home Federal Savings and Loan,” was foreclosing “To Satisfy the [$7,510.46] Debt Secured by the Deed of Trust . . . .”

Thus, when we consider the terms of the note with respect to acceleration, the terms of the deed of trust directing the manner of distribution of the proceeds and the notice filed with the Recorder of Deeds, we conclude that the trustees properly applied the proceeds of the foreclosure sale. The commencement of an action for the principal sum is sufficient in itself to show that the holder exercised its option to accelerate the payment of the principal, and the proceedings to foreclose by advertisement are, for such purpose, the equivalent of an action to foreclose.

It is not necessary in this case to make a determination concerning appel-lees' alternative claim of laches.

For the foregoing reasons we affirm the judgment of the trial court.

Judgment accordingly.

      . The plaintiff-appellants in this action are S & G Investment, Inc., Myron Golob and Barbara A. Golob. Myron Golob was president of S & G. Between July 1, 1968, and July 1, 1969, Myron Golob was a 50% stockholder in S & (1 and thereafter he was a 100% stockholder. Mike Golob Associates, Inc. was also a business of Myron Golob. So, for all practical purposes, when S & G is referred to, it refers to all plaintiffs and all appellants (hereinafter referred to as appellants and S & G), except that only the Go-lobs personally endorsed the note to the Davis Mortgage Company secured by the second trust deed.

      . S & G Investment Company acquired its interest in the property after subsequent conveyances from the original owners and borrowers, David and Sarah G. Mushinsky. S & G acquired its title to the property subject to the encumbrance but without assuming any of the indebtedness.

      . The District Court granted defendants’ motion for summary judgment, denied plaintiffs’ motion for summary judgment, dismissed tlie cross-claims of defendants Alvin G. & Margaret Francies (purchasers from the purchaser at the foreclosure sale), and dismissed the cross-claim of defendant Theodore J. Scheve (the purchaser at the foreclosure sale).

      . D.C.Code § 45-615(b) provides:
      (b) No foreclosure sale under a power of sale provision contained in any deed of trust, mortgage or other security instrument, may take place unless tlie holder of the note secured by such deed of trust, mortgage, or security instrument, or its agent, gives written notice, by certified mail return receipt requested, of said sale to the owner of the real property encumbered by said deed of trust, mortgage or security instrument at his last known address, with a copy of said notice being sent to the Commissioner of the District of Columbia, or his designated agent, at least 30 days in advance of the date of said sale. Said notice shall be in such format and contain such information as the District of Columbia Council shall by regulation prescribe. The 30-day period shall commence to run on the date of receipt of such notice by the Commissioner. The Commissioner or his agent shall give written acknowledgment to the holder of said note, or its agent, on the day that he receives such notice, that such notice has been received, indicating therein the date of receipt of such notice. The notice required by this subsection (b) in regard to said mortgages and deeds of trust shall be in addition to the notice described by subsection (a) of this section (Mar. 3, 1901, SI Stat 1274, ch. 854, § 539; June 30, 1902, 32 Stat. 532, ch. 1329; Oct. 12, 1968, Pub.L. 90-566, § 1, 82 Stat. 1002.)
      On the same date, Home Federal sent the required notice in due form to the Recorder of Deeds for the District of Columbia.

      . The address was:
      S & G Investment., Inc.
      c/o Mike Golob Association, Inc.
      3737 Branch Avenue, Suite 407A
      Hillcrest Heights, Maryland 20023

      . The complete letter follows:
      October 27, 1969
      Re: Loan #92462-3
      S & G Investment, Inc.
      c/o Mike Golob Association, Inc.
      3737 Branch Avenue, Suite 407A
      Hillcrest Heights, Maryland 20023
      Dear Sirs:
      Our records indicate that your account is now three monthly payments in arrears.
      We liave, therefore, initiated foreclosure action as evidenced by the enclosed notice.
      If you wish to avoid further expense and ultimate loss of your property it is imperative that you contact this office immediately.
      Sincerely,
      /s/ Ralph S. Childs, Jr.
      RALPH S. CHILDS, Jk.
      Vice President
      RSC/as
      Enel.

      . The Recorder of Deeds is the agent of the Commissioner of the District of Columbia for the purposes specified in D.C.Code § 45-615(b), supra note 4.

      . In response to interrogatories Seheve specified the repairs and rehabilitation that he had applied to the property as follows:
      5. Porch roof and main roof was coated with roof coating, and repaired, main roof had leaks in several places in front bedroom. Plastering was done on ceilings and walls throughout the house, including almost the entire new ceiling in kitchen and dining rooms. Window sash ropes and glass repaired in many windows. Painted interior and exterior of house. Moors repaired and cleaned. Heating system repaired. Installed new hot water heater. Installed new toilet in basement. Removed old kitchen fixtures in basement. Repaired joists under kitchen floor. Replaced laundry tub waste lines. Repaired basement doors, front and rear, and repaired basement coal bin. Repaired electric plugs and fixtures and installed two individual plugs for air conditioner, plus panel for same. Repaired cracked laundry
      tubs. Repaired leaking kitchen sink which liad been installed improperly. Repaired ceramic tile in bathroom. Installed refrigerator. Constructed retaining wall to divert water from rushing into basement, from adjoining property. Repaired termite damage in pantry adjoining kitchen. Removed water from flooded basement about, five times. Semi-weekly cleaning and removal of trash from drains in front and rear areaways and yards, grass cutting and daily inspection of the property. Paid gratuities to neighbors to watch property as preventative from vandals. Furnished heat and electric. Trash removal from property.
      The foregoing is some indication of the poor condition of the property when he acquired it.

      . Note 4 supra.

      . See note 18 infra.

      . See quotation from Glenn on Mortgages, text page 378, infra.

      . Butte & Superior Copper Co. v. Clark-Montana Realty Co., 249 U.S. 12, 27, 39 S.Ct. 231, 63 L.Ed. 447 (1919); W.A.H. Church, Inc. v. Holmes, 60 App.D.C. 27, 30, 46 F.2d 608, 611 (1931). The filing of the copy of the notice with the Recorder of Deeds for the District of Columbia also has some elements of constructive notice.

      . D.C.Code § 45-615(a) provides:
      § 45-615. Terms of sale and notice to be given.
      (a) If the length of notice and terms of sale are not prescribed by the mortgage or deed of trust, or be not left therein to the judgment or discretion of the mortgagee or trustee, any person interested in such sale may apply to the court, before such sale is advertised, to fix the terms of sale and determine what notice of sale shall be given.

      . Another Golob-owned enterprise.

      . Hearings before Subcommittee on Business and Commerce of the Senate Committee on the District of Columbia, 90th Cong., 1st & 2d Sess. on S. 316, S. 2589, S. 2590, S. 2592, held from December 5, 1967, to February 1, 1968, herein referred to as Senate hearings.

      . 82 Stat. 1002 ; see note 4 sxopra.

      . Certain-Teed Products Corp. v. Sanders, 264 N.C. 234, 141 S.E.2d 329, 333 (1965); Woodell v. Davis, 261 N.C. 160, 163, 134 S.E.2d 160, 163 (1964); Lopez v. Bell, 207 Cal.App.2d 394, 24 Cal.Rptr. 626, 628 (1962) (notice of default had been mailed and returned unopened); Euge v. Blase, 339 S.W.2d 807 (Mo.1960); Lancaster Security Investment Corp. v. Kessler, 159 Cal.App.2d 649, 324 P.2d 634 (1958); Kalin v. Cronig, 328 Mass. 206, 103 N.E.2d 223 (1952); Blanch v. Collison, 174 Md. 427, 199 A. 466 (1938); Grove v. Great Northern Loan Co., 17 N.D. 352, 116 N.W. 345, 347 (1908); Harlin v. Nation, 126 Mo. 97, 27 S.W. 330, 331 (1894); and see Logan v. Short, 342 F.Supp. 1349, 1352 (E.D.Mo.1972).

      . Scott v. Paisley, 271 U.S. 632, 635, 46 S.Ct. 591, 592, 70 L.Ed. 1123 (1926):
      In the absence of a specific provision to that effect, the bolder of a mortgage or trust deed with power of sale, is not required to give notice of the exercise of the power to a subsequent purchaser or in-cumbrancer ; and the validity of the sale is not affected by the fact that such notice is not given.
      Certain-Teed Products Corp. v. Sanders, 264 N.C. 234, 141 S.E.2d 329, 333 (1965); Hrovat v. Bingham, 341 S.W.2d 365 (Mo.App. 1960); Armille v. Lovett, 100 N.H. 203, 122 A.2d 265 (1956) (attaching creditors); DesLauries v. Shea, 300 Mass. 30, 13 N.E.2d 932, 937 (1938); Watkins v. Booth, 55 Colo. 91, 132 P. 1141 (1913); Atkinson v. Washington & Jefferson College, 54 W.Va. 32, 46 S.E. 253, 259-260 (1903); McIver v. Smith, 118 N.C. 73, 23 S.E. 971 (1896); Hardwicke v. Hamilton, 121 Mo. 465, 26 S.W. 342 (1894); Chilton v. Brooks, 71 Md. 445, 18 A. 868 (1889); Carroll v. Kershner, 47 Md. 262, 276 (1877).

      . D.C.Code § 13-336 provides :
      § 13-336. Service by publication on nonresidents, absent defendants, and unknown heirs or devisees

      (a) In actions specified by subsection (b) of this section, publication may be substituted for personal service of process upon a defendant who can not be found and who is shown by affidavit to be a nonresident, or to have been absent from the District for at least six months, or against the unknown heirs or devisees of deceased persons.
      (b) This section applies only to:
      * $ $ $ $
      (4) actions for foreclosure of mortgages and deeds of trust;
      (6) actions for the enforcement of mechanics’ liens, and other liens against real or personal property within the District; and
      (7) actions that have for their immediate object the enforcement or establishment of any lawful right, claim, or demand to or against any real or personal property within the jurisdiction of the court.
      (Dec. 23, 1963, 77 Stat. 514, Pub.L. 88-241. § 1, eff. Jan. 1, 1964.)

      . Appellants’ Brief, 30-43.

      . A trustee under a deed of trust with conventional provisions, such as we have here, is basically a trustee of a power to convey title under certain circumstances, i.e., after a forced sale or payment. His powers and duties must be exercised with religious fidelity to ethical principles but his management responsibilities fall short of those, conferred on trustees generally. In Lancaster Security Investment Corp. v. Kessler, 159 Cal.App.2d 649, 324 P.2d 634, 638-639 (1958), the court stated :
      An ordinary trust deed is little more than a mortgage with power to convey. Bank of Italy etc. Ass’n v. Bentley, 217 Cal. 644, 654, 20 P.2d 940. “A trustee under a deed of trust does not assume the important obligations which are in some instances cast upon a trustee by operation of law.” Ainsa v. Mercantile Trust Co., 174 Cal. 504, 510, 163 P. 898, 900, and cases cited. The trustee of a trust deed is not a trustee in the strict sense of the word. The role of such a trustee is more nearly that of a common agent of the parties to the instrument. Pacific States Savings & Loan Co. v. North American etc. Co., 37 Cal.App.2d 307, 310, 99 P.2d 355.
      While this California case may tend to slightly underemphasize the fiduciary nature of the obligation of trustees under deeds of trust in the District of Columbia, it does point out the limited nature of the powers and duties conferred on trustees by a deed of trust. However, it is well recognized in this jurisdiction that a trustee under a deed of trust owes fiduciary duties both to the noteholder and to the borrower. See National Life Ins. Co. v. Silverman, 147 U.S.App.D.C. 56, 454 F.2d 899 (1971); Maynard v. Sutherland, 114 U.S.App.D.C. 169, 174 n. 16, 313 F.2d 560, 565 n.16 (1962); Spruill v. Ballard, 61 App.D.C. 112, 58 F.2d 517 (1932).

      . See note 18 supra.

      . National Life Ins. Co. v. Silverman, 147 U.S.App.D.C. 56, 454 F.2d 899 (1971); Orlove v. National Savings & Trust Co., 68 App.D.C. 387, 98 F.2d 259 (1938; General Auto Truck Co. v. Rust, 66 App.D.C. 392, 88 F.2d 774 (1936); Jackson v. Fuller, 66 App.D.C. 239, 85 F.2d 816 (1936); Anderson v. White, 2 App.D.C. 408 (1894).

      . Mr. Sclieve submitted the following answer to one of appellants’ interrogatories :
      7. Profit $2,430.40.
      Acquisition cost $8,391.91
      Insurance 73.00
      Water bills approx. 36.00
      Approx, interest on bank loans 800.00
      gas bill, heat and hot water 100.00
      Electric 50.00
      6% sales commission on sale of house 1,248.00
      6% commission on purchase 481.50
      Repairs and improvements 6,000.00 $17,180.41
      Received from sale 19,610.81
      Profit $2,430.40
      /s/ Theodore J. Scheve
      THEODORE J. SCHEVE
      Some of these costs were shown on cross examination to be personal estimates of personal services and we would not arrive at exactly the same profit as Scheve computes, but the figures, when coupled with the nature of the “Repairs and improvements” described in note 8, supra, are sufficient to demonstrate that this is not a ease of gross inequity which shocks the conscience. See Orlove v. National Savings & Trust Co., 68 App.D.C. 387, 98 F.2d 259 (1938); Jackson v. Fuller, 66 App.D.C. 239, 85 F.2d 816 (1936).

      . See note 6 supra.

      . Home Fed. S. & L. Ass’n v. LaSalle Nat’l Bank, 130 Ill.App.2d 285, 264 N.E.2d 704, 706 (1970); South Dade Farms Inc. v. Atlantic Nat’l Bank, 222 So.2d 275, 277 (Fla.App.1969); August Tobler, Inc. v. Goolsby, 67 So.2d 537, 538-539 (Fla.1953); Griffith v. White, 259 Ala. 379, 66 So.2d 907, 908 (1953); Union Central Life Ins. Co. v. Keith, 58 Idaho 471, 74 P.2d 699 (1937); Seligman v. Bisz, 123 Fla. 493, 167 So. 38, 39 (1936); Albertina Realty Co. v. Rosbro Realty Corp., 258 N.Y. 472, 180 N.E. 176 (1932); Williams v. Gordon, 205 Cal. 590, 271 P. 1070, 1071 (1928); Meredith v. Long, 96 Fla. 719, 119 So. 114 (1928); Wienke v. Smith, 179 Cal. 220, 176 P. 42, 44 (1918).

      . Heist v. Dunlap & Co., 193 Ga. 462, 18 S.E.2d 837, 840 (1942); Delray, Inc. v. Piedmont Inv. Co.. 194 Ga. 319, 21 S.E.2d 420, 422 (1942); Redwine v. Frizzell, 184 Ga. 230, 234, 235, 190 S.E. 789 (1937); and see Sharpe v. Brotzman, 145 Cal.App.2d 354, 302 P.2d 668 (Cal.1956) where a statement attached to a formal notice of foreclosure was held to constitute an exercise of the option to accelerate payment of the entire principal.

      . Appellees also present a strong claim that appellants were guilty of laches in not bringing an action until such time as intermediate transfers of title and costly improvements to the property by a bona fide purchaser made it virtually impossible to set aside the foreclosure sale as against Home Federal and Scheve and thus forced upon the trustees a liability substantially in excess of what they would have been liable for had appellants acted with reasonable promptness. S & G and Golob were in the investment business themselves and thus cannot plead ignorance of foreclosure practices or excuse their long delay. And by asserting that their “primary request for relief is damages against the trustees” (Appellants’ Brief, 2), they inferentially recognize that their laches has precluded the granting of any relief against Home Federal, Scheve or the Francies (the eventual purchasers).
      On the issue of laches, the following dates are important: The foreclosure sale was publicly advertised in the Washington STAR on November 20, 22, 25, 28 and December 1, 1969; Scheve thereafter repaired, painted and improved the property; appellants’ counsel asserted their written claim by letter to Home Federal on August 17, 1970; on September 18, 1970, Scheve contracted to sell to the Francies and that sale was settled on November 25, 1970; and appellants filed the instant suit on December 2, 1970.
      Thus, if appellants had possessed a bona fide cause of action, had they acted more promptly after December 2, 1969, they could have set aside the foreclosure sale and returned the parties to the status quo ante with little or no financial loss to Home Federal, Scheve or the trustees. Instead, appellants stood idly by until August 17, 1970 (8% months) before they asserted their claims to Home Federal and then waited another 3% months before they filed their lawsuit. Such delay permitted the foreclosure sale to ripen into transfer of title, permitted the bona fide purchaser at the foreclosure sale to increase the value of the disputed property by making substantial improvements, and permitted sale to another bona fide purchaser for value. These sales to bona fide purchasers and the change in the value of the property precluded setting aside the foreclosure sale and, thus, S & G by its delay impressed upon the trustees a far greater monetary liability than if it had acted more promptly when the situation could have been rectified by a mere return of the property to the status quo ante the foreclosure sale. Such facts constitute all the necessary ingredients of a laches defense. Justice Brewer enunciated the classic definition of laches in Galliher v. Cadwell, 145 U.S. 368, 373, 12 S.Ct. 873, 875, 36 L.Ed. 738 (1892) when he remarked that “laches is not, like limitation, a mere matter of time; but principally a question of the inequity of permitting the claim to be enforced, — an inequity founded upon some change in the condition or relations of the property or the parties.” (Emphasis added.) See also Holmberg v. Armbrecht, 327 U.S. 392, 396, 66 S.Ct. 582, 90 L.Ed. 743 (1946); O’Brien v. Wheelock, 184 U.S. 450, 493, 22 S.Ct. 354, 46 L.Ed. 636 (1902); Penn Mutual Life Ins. Co. v. Austin, 168 U. S. 685, 698, 18 S.Ct. 223, 42 L.Ed. 626 (1898); Holgate v. Eaton, 116 U.S. 33, 40, 41, 6 S.Ct. 224, 29 L.Ed. 538 (1885); Hayward v. Eliot Nat’l Bank, 96 U.S. 611, 617, 24 L.Ed. 855 (1878). The condition and relation of all the defendant parties, and particularly the trustees, was changed during the delay of appellants and hence appellants would be subject to the consequences of the rule.