225 N.Y. 397, In re Pennsylvania Gas Co.

Citation:225 N.Y. 397
Party Name:In the Matter of the Application of PENNSYLVANIA GAS COMPANY, Appellant, for a Writ of Prohibition v. PUBLIC SERVICE COMMISSION, SECOND DISTRICT, et al., Respondents.
Case Date:January 28, 1919
Court:New York Court of Appeals
 
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Page 397

225 N.Y. 397

In the Matter of the Application of PENNSYLVANIA GAS COMPANY, Appellant, for a Writ of Prohibition

v.

PUBLIC SERVICE COMMISSION, SECOND DISTRICT, et al., Respondents.

New York Court of Appeal

January 28, 1919

Argued January 8, 1919.

Page 398

COUNSEL

Marion H. Fisher and John E. Mullin for appellant. The power to regulate commerce among the states

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delegated by the Constitution to the Federal government is exclusive. The states have no power to regulate, burden or restrict interstate commerce. (U.S. Const. art. 1, § 8; Gibbons v. Ogden, 9 Wheat. 1; Brown v. Houston, 114 U.S. 622; Walling v. Michigan, 116 U.S. 455; Wabash, St. L. & Pacific R. R. Co. v. Illinois, 118 U.S. 557; Bowman v. Chicago, etc., Ry. Co., 125 U.S. 507; Leisy v. Hardin, 135 U.S. 100; Lyng v. Michigan, 135 U.S. 161; Covington & Cincinnati Bridge Co. v. Kentucky, 154 U.S. 204; Louisville & Nashville R. R. Co. v. Eubank, 184 U.S. 27; Caldwell v. North Carolina, 187 U.S. 622; Oklahoma v. Kansas Nat. Gas Co., 221 U.S. 261; Minnesota Rate Cases, 230 U.S. 352; Clark Distilling Co. v. Maryland R. R. Co., 242 U.S. 311; Southern Pac. Co. v. Jensen, 244 U.S. 205.)The transportation and sale of gas by pipe line in interstate commerce is a business national in character and susceptible of Federal regulation. (West v. Kansas Natural Gas Co., 221 U.S. 229; Kansas Natural Gas Co. v. Haskell, 172 F. 545; Haskell v. Kansas Natural Gas Co., 224 U.S. 217; Haskell v. Cowham, 187 F. 403; Landon v. Public Utilities Commission, 242 F. 682.) The distribution and sale of relator's Pennsylvania gas to consumers in New York is a vital and protected part of relator's interstate business. The 'original package' rule does not apply to gas transported by pipe line. (Brown v. Maryland, 12 Wheat. 419; M. W. T. Co. v. Comm., 218 Mass. 558; Hatch v. Reardon, 184 N.Y. 452; State Freight Tax, 15 Wall. 232; Illinois Central R. R. Co. v. Louisiana Ry. Co., 236 U.S. 157; Covington Stock Yards Co. v. Keith, 136 U.S. 128; North Penna. R. R. Co. v. Bank, 123 U.S. 727; Swift & Company v. United States, 196 U.S. 398; Western Oil Refining Co. v. Lipscomb, 244 U.S. 346; Greek American Sponge Co. v. Richardson Drug Co., 124 Wis. 475;

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T. & N. O. R. R. Co. v. Sabine Tram Co., 227 U.S. 111.) The state of New York has no power or jurisdiction to fix the rate or sale price of relator's gas. Such action would be a regulation of and interference with commerce forbidden by the Constitution. (People ex rel. Hatch v. Reardon, 184 N.Y. 431; West v. Kansas Gas Co., 221 U.S. 229; Heyman v. Hays, 236 U.S. 178; Clark Distilling Co. v. Maryland Ry. Co., 242 U.S. 311; R. R. Comm. v. Worthington, 225 U.S. 101; W. U. Tel. Co. v. Kansas, 216 U.S. 1.)

Ledyard P. Hale for Public Service Commission, respondent. The 'commerce' conducted by appellant being expressly excluded by Congress from the jurisdiction of the interstate commerce commission remains within the reach of reasonable regulation by the states, and, therefore, in New York by the public service commission. (Pipe Line Cases, 234 U.S. 548; Manufacturers' Heat & Light Co. v. Ott, 215 F. 940; State ex rel. Caster v. Flannelly, 96 Kan. 372; Tax on Railway Gross Receipts, 15 Wall: 293.) The Pennsylvania Gas Company is engaged in a public service at Jamestown which is subject to the regulation of the state of New York, limited only by the Fourteenth Amendment of the Federal Constitution and the bill of rights embodied in the State Constitution. (Saratoga Gas Case, 191 N.Y. 123; People v. Budd, 117 N.Y. 14; Budd v. New York, 143 U.S. 535.)

Louis L. Thrasher and Robert H. Jackson for Alfred C. Davis et al., respondents. In the absence of legislation by the Federal government the state has the right to regulate the price of natural gas brought into and sold within its territory. (Oil Mfg. Co. v. Bd. of Agriculture, 222 U.S. 380; Wilson v. Blackbird Car, etc., Co., 2 Pet. 245; Gilman v. Philadelphia, 3 Wall. 713;

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Pound v. Turck, 95 U.S. 459; Simpson v. Shepard, 230 U.S. 352; M., K. & T. R. Co. v. Harris, 234 U.S. 412; Vandalia R. R. Co. v. P. S. Comm., 242 U.S. 255; W. U. Tel. Co. v. City of Richmond, 178 F. 310.)If the 'original package rule' can be applied to the sale of natural gas, then under that rule the sale of the gas within the state, after its transportation is completed, is not interstate commerce. (State ex rel. Caster v. Flannelly, Kansas Pub. Util. Rep. 810; Company v. Hardin, 135 U.S. 128.) Regulation of the selling price of natural gas piped from one state to another is not of a character requiring uniform national legislation and hence is not within that class of cases where the states are prohibited from legislation, even though Congress has not acted. (Jamieson v. Ind. N. G. & Oil Co., 128 Ind. 555.) State regulation of the selling price of gas piped in from another state infringes no province of Congress, is not a restriction upon interstate commerce in any sense, and is an appropriate exercise of a purely state function. (Manufacturers L. & H. Co. v. Ott, 215 F. 940.)

CARDOZO, J.

The Pennsylvania Gas Company is a Pennsylvania corporation which supplies natural gas to the inhabitants of the city of Jamestown. Its gas fields and wells are in Pennsylvania, and its gas is conveyed to Jamestown through pipe lines. About forty-five miles of line are in Pennsylvania and about five in New York. It has a branch office in Jamestown, and its mains and pipes are in the city's streets. Formerly its rates for gas were thirty cents a thousand. Recently it attempted to raise its rates to thirty-five cents, and filed a schedule with the public service commission accordingly. A citizen of Jamestown, alleging that the new rates were exorbitant, lodged a complaint with the commission.

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The gas company was directed to answer the complaint. It filed with the commission a demurrer to the jurisdiction which the commission overruled. Thereupon the company sued out a writ of prohibition. Its petition alleges...

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