249 U.S. 236 (1918), Public Utilities Commission for the

Citation:249 U.S. 236, 39 S.Ct. 268, 63 L.Ed. 577
Party Name:Public Utilities Commission for the
Case Date:March 17, 1919
Court:United States Supreme Court

Page 236

249 U.S. 236 (1918)

39 S.Ct. 268, 63 L.Ed. 577

Public Utilities Commission for the

United States Supreme Court

March 17, 1919




The district court, having extended its receivership under Jud.Code, § 56, over the entire business and property of a company engaged in interstate transportation and sale of gas in several states of the circuit, has jurisdiction of a dependent bill brought by the recervers to enjoin officials of those states from imposing rates alleged to be conflscatory and burdensome to the interstate business. P. 244. See 234 F. 152, 155.

Interstate commerce is a practical conception, and what falls within it must be determined upon considerations of established facts and known commercial methods. P. 245.

While the piping of natural gas from state to state and its sale and delivery to independent local gas companies is interstate commerce, the retailing of the gas by the local companies to their consumers is intrastate commerce, and is not a continuation of such interstate commerce, even though their mains are connected permanently

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with those of their vendor and their vendor's agreed compensation is a definite proportion of their gross receipts. Id.

In such case, regulation of the rates chargeable by the local companies has but an indirect effect upon the interstate business of the transporting and selling company; at least when the latter is in the hands of receivers who have not accepted or become bound by the contracts with the former, and such receivers, not being obliged to accept unremunerative prices, have no ground to complain that rates fixed for the local companies are confiscatory or are burdensome to the interstate business, even though that business consists exclusively in selling the gas to such local companies. P. 246.

234 F. 152; 242 F. 658; 245 F. 950, reversed.

The case is stated in the opinion.

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MCREYNOLDS, J., lead opinion

MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

These are appeals by different groups of defendants below from decree prohibiting public commissions and officers of Kansas and Missouri, certain municipalities, and many local gas distributing companies from interfering with establishment and maintenance of selling rates for gas to consumers sufficiently high to compensate receivers of the Kansas Natural Gas Company. 234 F. 152; 242 F. 658; 245 F. 950.

The Kansas Natural Gas Company -- hereinafter, the Gas Company -- a Delaware corporation, owned a system of pipelines extending from Oklahoma and Kansas points to some forty terminal towns and cities in Kansas and Missouri and produced, purchased, transported, distributed, and sold natural gas prior to October 9, 1912. During the years 1904-1908, by separate agreements, it undertook to supply many local companies with gas for ultimate sale to their customers and to accept therefor a definite proportion -- generally two-thirds -- of the gross amounts paid by such customers. Permanent physical connections permitted gas to pass from the Gas Company's pipelines into the several local companies' mains. The latter operated under special ordinances usually specifying the rates which customers should pay, and, except in four relatively unimportant places, the former had no local franchise permitting either distribution or sale of gas, nor did it own any interest in a defendant distributing company.

The Gas Company procured gas by drilling, purchase, or otherwise in Southern Kansas and Oklahoma -- six percent in the former -- forced it through pipelines, and delivered it in the local mains at the connection points. None was obtained in Missouri. Having received gas at the connection points, the several local companies distributed

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and sold it, collected established rates, and settled with the Gas Company as agreed. Approximately 44 percent of the total was thus sold to customers in Kansas and 56 percent in Missouri.

October 9, 1912, the United States...

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