Bartlett & Co., Grain v. State Corp. Com'n of Kansas

Citation223 F. Supp. 975
Decision Date26 November 1963
Docket NumberCiv. No. T-3289.
PartiesBARTLETT AND COMPANY, GRAIN, a Missouri Corporation, Plaintiff, v. STATE CORPORATION COMMISSION OF KANSAS, William L. Mitchell, Chairman, Alvin F. Grauerholz and Harry G. Wiles, as Members of said Commission, and their respective successors in office, Defendants.
CourtU.S. District Court — District of Kansas

Erle Francis, Topeka, Kan., Charles B. Blackmar and James H. McLarney, of Swanson, Midgley, Jones, Blackmar & Eager, Kansas City, Mo., for plaintiff.

Robert C. Londerholm, Topeka, Kan., for defendants.

Before HILL, Circuit Judge, and RIZLEY and TEMPLAR, District Judges.

TEMPLAR, District Judge.

On April 4, 1963, the plaintiff filed its complaint and in paragraph 9 thereof it is asserted:

"Since injunction against state statutes and state administrative action is sought this case is required to be heard before a three-judge district court. 28 U.S.C. § 2281."

Because injunctive relief was sought against state statutes and against state administrative action Chief Judge Alfred P. Murrah was immediately notified and thereafter this Court was duly appointed, in accordance with 28 U.S.C. § 2284, to hear the cause.

The matter was heard on July 12, 1963, and thereafter briefs were filed in accordance with the direction of the Court. At the hearing, neither of the parties was certain that the case was one for three judges, and, therefore, we decided that we would first pass upon the question of our jurisdiction as a three-judge court.

28 U.S.C. § 2281 reads as follows:

"An interlocutory or permanent injunction restraining the enforcement, operation or execution of any State statute by restraining the action of any officer of such State in the enforcement or execution of such statute or of an order made by an administrative board or commission acting under State statutes, shall not be granted by any district court or judge thereof upon the ground of the unconstitutionality of such statute unless the application therefor is heard and determined by a district court of three judges under section 2284 of this title."

The factual situation is succinctly stated in the Complaint. It reads:

"4. The plaintiff is engaged in the grain business. It purchases grain at numerous points in the State of Kansas and causes the grain so purchased to be shipped to an elevator known as the River Rail Terminal, which is located at the confluence of the Kansas and Missouri Rivers, in Wyandotte County, Kansas, for further shipment by rail or by barge to points outside the State of Kansas. All grain so purchased and transported to River Rail Terminal by truck is destined for shipment to points outside of the state of Kansas, and none of the said grain is resold or shipped to points inside the state of Kansas. Therefore, all such shipments are wholly in interstate commerce.
"5. The plaintiff in shipping grain from Kansas points to River Rail Terminal makes use of the services of various contract and common truck carriers. By the terms of the Motor Carrier Act, 49 U.S.C. §§ 301-327, vehicles owned and operated by such carriers while employed in transporting grain are exempt from regulation as to rates and as to authority, by the Interstate Commerce Commission, or otherwise, and plaintiff therefore is free to arrange for such transportation with any available carrier, at mutually satisfactory rates, and without the need for authority on the part of the carrier. The aforesaid provisions of the Motor Carrier Act show a positive intention on the part of Congress that there be no regulation of such transportation as to rates and authorities.
"6. The defendants have sought to impose upon the plaintiff and upon contract and common carriers, the scheme and program of regulation as prescribed by the laws of the state of Kansas. These laws provide that no common or contract carrier may transport grain for hire within the state of Kansas without authority from the defendant Kansas Corporation Commission, and at rates prescribed and approved by that commission. The defendants deny and refuse to recognize plaintiff's position that shipments in the manner described in this complaint are wholly interstate shipments. Unless restrained and enjoined by this Court, the defendants will interfere with plaintiff in the conduct of its business and with common and contract carriers employed by the plaintiff.
"8. The plaintiff is in competition with numerous elevators and facilities which are located on the Missouri side of the metropolitan area of Greater Kansas City. The defendants have not attempted to regulate shipments to these competitors. Rates prescribed by the defendant Commission are substantially higher than are the rates which can be negotiated in the absence of control. The plaintiff therefore will suffer irreparable damage if forced to pay rates in excess of those paid by its competitor. The plaintiff, moreover, will be unable to obtain the services of common and contract carriers. The Interstate Commerce Commission has no jurisdiction over the defendants and no power to grant any relief to the plaintiff in the premises."

The Complaint then alleges:

"The * * * statutes of the state of Kansas cannot constitutionally be applied to the business of the plaintiff as described in this complaint, for the following reasons:

"(a) Such statutes (primarily Kan.G.S.1949, 66-1,107 through 66-1,118) purport to regulate interstate commerce in addition to intrastate commerce, and therefore are in excess of the power of the state by reason of Article I, Section 8, Paragraph 3 of the Constitution of the United States which gives Congress the sole and exclusive power to regulate interstate commerce.
"(b) Congress by enacting the Motor Carrier Act has pre-empted and occupied the field of interstate transportation of grain by truck, and any state statutes and regulations in the field are therefore unconstitutional by reason of Article VI, Paragraph 2, of the Constitution of the United States, commonly known as the `Supremacy Clause.'

"Plaintiffs pray that the Court:

"(a) Find and declare that the shipments of grain from points in Kansas to River Rail Terminal for shipment to points outside the state, constitute interstate commerce and as such are free from regulation by the State of Kansas as to rates and authority;
"(b) Find and declare that the defendants have no jurisdiction as to rates and authority over such shipments by truck; and
"(c) Enter temporary and permanent injunctions restraining and enjoining the defendants from attempting to exercise jurisdiction and regulate such shipments of grain."

The defendants have answered the Complaint, asserting that the shipments in question are not shipments in interstate commerce, and for this reason they have authority to prescribe the rates.

The parties have stipulated that the question for decision is whether the truck shipments of grain "from Kansas points over highways wholly within the State of Kansas to Kansas City, Kansas, are intra-state shipments subject to the jurisdiction of the Kansas Corporation Commission or are rendered interstate in character by reason of subsequent interstate shipment of the grain from Kansas City, Kansas to points in states other than the State of Kansas."

However, the first question we will consider is whether or not the dispute is required to be heard in accordance with 28 U.S.C. § 2281.

The purpose of Section 2281 is to provide procedural protection against an improvident invalidation of a state's legislative policy by a single federal judge. Phillips v. United States, 312 U.S. 246, 61 S.Ct. 480, 85 L.Ed. 800; Jacobs v. Tawes, 4 Cir., 250 F.2d 611; Division 1287, Amalgamated Ass'n of St., Elec. Ry. & Motor Coach Emp. of America, A.F.L.-C.I.O. v. Dalton, 206 F.Supp. 625 (W.D.Mo.1961). In other words, its purpose is to protect state sovereignty. Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 69 S.Ct. 606, 93 L.Ed. 741. The statute is not to be viewed "as a measure of broad social policy to be construed with great liberality, but as an enactment technical in the strict sense of the term and to be applied as such." Kesler v. Department of Public Safety, 369 U.S. 153, 156, 82 S.Ct. 807, 810, 7 L.Ed.2d 641. In short, the grant of jurisdiction to a statutory three-judge court should be closely construed to the end that only those cases which plainly fall in the class therein described may be referred to such a court. Marshall v. Sawyer, 9 Cir., 301 F.2d 639; Moss v. Hornig, 214 F.Supp. 324 (D. Conn.1962), aff'd., 2 Cir., 314 F.2d 89; Eastern Freight-Ways, Inc. v. United States, 170 F.Supp. 848 (D.N.J.1959.)

It has been said that "the principles in regard to the convening of a court of three judges have been clearly stated but are not too simple in application." Webb v. State University of New York, 120 F.Supp. 554 (N.D.N.Y.1954), appeal dismissed, 348 U.S. 867, 75 S.Ct. 113, 99 L.Ed. 683. The "clearly stated" principles or prerequisites under § 2281 are as follows:

(1) An interlocutory or permanent injunction must be sought;
(2) The injunction sought must be one to restrain the action of a state officer or administrative agency;
(3) The action sought to be enjoined must consist of the enforcement or execution of a state statute, and,
(4) The injunction must be sought on the ground that the state statute is unconstitutional.

In addition, it has generally been held that a disputed substantial federal question on constitutional grounds must be presented or a three-judge court has no jurisdiction. See, e. g., Bailey v. Patterson, 369 U.S. 31, 82 S.Ct. 549, 7 L.Ed.2d 512; Haines v. Castle, 7 Cir., 226 F.2d 591, cert. denied, 350 U.S. 1014, 76 S.Ct. 660, 100 L.Ed. 874; Booker v. State of Tennessee Board of Education, 6 Cir., 240 F.2d 689, cert. denied, 353 U.S. 965, 77 S.Ct. 1050, 1 L.Ed.2d 915; German v. South Carolina State Ports Authority, 4 Cir., 295 F.2d 491. However, if a disputed substantial federal question is presented and...

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