United States v. State of California

Decision Date03 February 1936
Docket NumberNo. 33,33
PartiesUNITED STATES v. STATE OF CALIFORNIA
CourtU.S. Supreme Court

Messrs. Homer S. Cummings, Atty. Gen., and Golden W. Bell, Sol. Gen., of Washington, D.C., for the United States.

[Argument of Counsel from pages 176-177 intentionally omitted] Mr. Ralph Marron, of San Francisco, Cal., for the State of California.

[Argument of Counsel from pages 178-180 intentionally omitted] Mr. Justice STONE delivered the opinion of the Court.

This is a suit brought by the United States against the state of California in the District Court for Northern California to recover the statutory penalty of $100 for violation of the Federal Safety Appliance Act, § 2, Act of March 2, 1893, c. 196, 27 Stat. 531, 45 U.S.C. § 2 (45 U.S.C.A. § 2), and section 6 of the act, as amended April 1, 1896, 29 Stat. 85, 45 U.S.C. § 6 (45 U.S.C.A. § 6).1

The complaint alleges that California, in the operation of the state-owned State Belt Railroad, is a common carrier engaged in interstate transportation by railroad, and that it has violated the Safety Appliance Act by hauling over the road a car equipped with defective coupling apparatus. Upon the trial, without a jury, upon stipulated facts, the District Court gave judgment for the United States. The Court of Appeals for the Ninth Circuit reversed, 75 F.(2d) 41, on the ground that as exclusive jurisdiction of suits to which a state is a party is conferred upon this Court by section 233 of the Judicial Code, 36 Stat. 1156, 28 U.S.C. § 341 (28 U.S.C.A. § 341), the District Court was without jurisdiction of the cause. We granted certiorari, 296 U.S. 554, 56 S.Ct. 87, 80 L.Ed. 391, to review the case as one involving questions of public importance, upon a petition of the government which urged that the state is a common carrier by railroad, subject to the Safety Appliance Act, and, under its provisions, to suit in the District Court to recover penalties for violation of the act.

In an earlier suit, Sherman v. United States, 282 U.S. 25, 51 S.Ct. 41, 75 L.Ed. 143, brought against the Board of State Harbor Commissioners, which supervises operation of the State Belt Railroad, to recover penalties for violation of the act, this Court set aside the judgment of the District Court for the government because the state had not been made a party.

1. Whether a transportation agency is a common carrier depends not upon its corporate character or declared purposes, but upon what it does. United States v. Brooklyn Eastern District Terminal, 249 U.S. 296, 304, 39 S.Ct. 283, 63 L.Ed. 613, 6 A.L.R. 527. The State Belt Railroad is owned and operated by the state, see Sherman v. United States, supra. It parallels the water front of San Francisco harbor and extends onto some forty-five state-owned wharves. It serves directly about one hundred and seventy-five industrial plants, has track connection with one interstate railroad, and, by wharf connections with freight car ferries, links that and three other interstate rail carriers with freight yards in San Francisco leased to them by the state. It receives and transports from the one to the other, by its own engines, all freight cars, loaded and empty, and the freight they contain, offered to it by railroads, steamship companies, and industrial plants. The larger part of this traffic has its origin or destination in states other than California. For the transportation service, it makes a flat charge per car. It issues no bills of lading and is not a party to through rates. It moves the cars on instructions contained in 'switch lists' made out by the delivering or receiving carrier, which pays the charge and absorbs it in its rate. The charge on cars not delivered to or received from another carrier is paid by the industry concerned.

The Belt Railroad is thus a terminal railroad for the industries and carriers with which it connects, and it serves as a link in the through transportation of interstate freight shipped to or from points in San Francisco over the connecting carriers. Its service is of a public character, for hire, and does not differ in any salient feature from that which this Court, in United States v. Brooklyn Eastern District Term nal, supra, 249 U.S. 296, 304, 305, 39 S.Ct. 283, 63 L.Ed. 613, 6 A.L.R. 527, held to be common carriage by rail in interstate commerce within the meaning of the Federal Hours of Service Act, 34 Stat. 1415, 45 U.S.C. § 61 (45 U.S.C.A. § 61).

The state insists that the facts that it maintains no freight station, issues no bills of lading, and is engaged only in moving cars for a flat rate instead of at a charge per hundred pounds of freight moved, distinguish the operation of its railroad from that of the Brooklyn Terminal. As the service involves transportation of the cars and their contents, the method of fixing the charge is unimportant. Belt Railway Co. of Chicago v. United States (C.C.A.) 168 F. 542, 544, 22 L.R.A.(N.S.) 582; see United States v. Union Stock Yard & Transit Co., 226 U.S. 286, 299, 300, 33 S.Ct. 83, 57 L.Ed. 226. And while maintenance of a freight station and the issue of bills of lading may be embraced in the service of a common carrier, and a part of interstate commerce, see United States v. Ferger, 250 U.S. 199, 39 S.Ct. 445, 63 L.Ed. 936, Atchison, T. & S.F. Ry. Co. v. United States, 295 U.S. 193, 55 S.Ct. 748, 79 L.Ed. 1382, they are not indispensable adjuncts to either where the subject of transportation, here cars loaded and empty, may be effected without.

All the essential elements of interstate rail transportation are present in the service rendered by the State Belt Railroad. They are the receipt and transportation, for the public, for hire, of cars moving in interstate commerce. See United States v. Union Stock Yard & Transit Co., 226 U.S. 286, supra, 299, 33 S.Ct. 83, 57 L.Ed. 226; Union Stockyards Co. v. United States (C.C.A.) 169 F. 404; Belt Railway Co. of Chicago v. United States, supra. Its service, involving as it does the transportation of all carload freight moving in interstate commerce between the industries concerned and all railroad and steamship lines reaching the port, is of the same character, though wider in scope, as that held to be common carriage by rail in interstate commerce in the Brooklyn Eastern District Terminal and the Union Stockyards Co. Cases. They abundantly support the conclusion that such is the service rendered by the state in the present case, a conclusion twice reached by the Court of Appeals for the Ninth Circuit, see McCallum v. United States, 298 F. 373; Tilden v. United States, 21 F.(2d) 967.

2. The state urges that it is not subject to the Federal Safety Appliance Act. It is not denied that the omission charged would be a violation if by a privately-owned rail carrier in interstate commerce. But it is said that as the state is operating the railroad without profit, for the purpose of facilitating the commerce of the port, and is using the net proceeds of operation for harbor improvement, see Sherman v. United States, supra, Denning v. State, 123 Cal. 316, 55 P. 1000, it is engaged in performing a public function in its sovereign capacity and for that reason cannot constitutionally be subjected to the provisions of the federal act. In any case it is argued that the statute is not to be construed as applying to the state acting in that capacity.

Despite reliance upon the point both by the government and the state, we think it unimportant to say whether the state conducts its railroad in its 'sovereign' or in its 'private' capacity. That in operating its railroad it is acting within a power reserved to the states cannot be doubted. See Puget Sound Power & Light Co. v. City of Seattle, 291 U.S. 619, 624, 54 S.Ct. 542, 78 L.Ed. 1025; Green v. Frazier, 253 U.S. 233, 40 S.Ct. 499, 64 L.Ed. 878; Jones v. Portland, 245 U.S. 217, 38 S.Ct. 112, 62 L.Ed. 252, L.R.A.1918C, 765, Ann.Cas. 1918E, 660. The only question we need consider is whether the exercise of that power, in whatever capacity, must be in subordination to the power to regulate interstate commerce, which has been granted specifically to the national government. The sovereign power of the states is necessarily dimin shed to the extent of the grants of power to the federal government in the Constitution. The power of a state to fix intrastate railroad rates must yield to the power of the national government when their regulation is appropriate to the regulation of interstate commerce. United States v. Louisiana, 290 U.S. 70, 74, 75, 54 S.Ct. 28, 78 L.Ed. 181; Railroad Commission of Wisconsin v. Chicago, B. & Q.R. Co., 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086; Houston, E. & W.T. Ry. Co. v. United States (Shreveport Rate Cases), 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341. A contract between a state and a rail carrier fixing intrastate rates is subject to regulation and control by Congress, acting within the commerce clause, Const.U.S. art. 1, § 8, cl. 3; New York v. United States, 257 U.S. 591, 42 S.Ct. 239, 66 L.Ed. 385, as are state agencies created to effect a public purpose, see Sanitary District of Chicago v. United States, 266 U.S. 405, 45 S.Ct. 176, 69 L.Ed. 352; Board of Trustees v. United States, 289 U.S. 48, 53 S.Ct. 509, 77 L.Ed. 1025; see Georgia v. Chattanooga, 264 U.S. 472, 44 S.Ct. 369, 68 L.Ed. 796. In each case the power of the state is subordinate to the constitutional exercise of the granted federal power.

The analogy of the constitutional immunity of state instrumentalities from federal taxation, on which respondent relies, is not illuminating. That immunity is implied from the nature of our federal system and the relationship within it of state and national governments, and is equally a restriction on taxation by either of the instrumentalities of the other. Its nature requires that it be so construed as to allow to each government reasonable scope for its taxing power, see Metcalf & Eddy v....

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