Egan v. United States, No. 12267

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: THOMAS and JOHNSEN, Circuit , and VOGEL
• Citation: 137 F.2d 369
• Parties: EGAN v. UNITED STATES. UNION ELECTRIC CO. OF MISSOURI v. SAME.
• Docket Number: 12268.,No. 12267
• Decision Date: 09 September 1943

137 F.2d 369 (1943)

EGAN
v.
UNITED STATES.
UNION ELECTRIC CO. OF MISSOURI
v.
SAME.

Nos. 12267, 12268.

Circuit Court of Appeals, Eighth Circuit.

August 9, 1943.

Rehearing Denied September 9, 1943.

137 F.2d 370

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Thomas Bond, of St. Louis, Mo., for appellant Louis H. Egan

Robert J. Keefe, of St. Louis, Mo. (Russell H. Doerner and Igoe, Carroll, Keefe & Coburn, all of St. Louis, Mo., on the brief), for appellant Union Electric Co. of Missouri.

Harry C. Blanton, U. S. Atty., of St. Louis, Mo., and Homer Kripke, Asst. Sol., Securities and Exchange Commission, of Philadelphia, Pa. (James R. Sharp, Sp. Atty., U. S. Department of Justice, of Washington, D. C., and Ervine J. Green, Atty., Securities and Exchange Commission, of Philadelphia, Pa., on the brief), for the United States, appellee in both cases.

Before THOMAS and JOHNSEN, Circuit Judges, and VOGEL, District Judge.

THOMAS, Circuit Judge.

The appellants, Louis H. Egan in No. 12,267, and Union Electric Company of Missouri in No. 12,268, were indicted and tried together. Their separate appeals were presented on a single record and submitted at the same time. It will be convenient to dispose of both appeals in a single opinion.

The appellant Union Electric Company of Missouri, a Missouri corporation, is a public utility holding company within the meaning of the Public Utility Holding Company Act of 1935, 15 U.S.C.A. § 79b. It is also an operating company. In connection with its subsidiaries it is engaged in operating electric public utilities in the states of Missouri, Illinois and Iowa. In carrying on its business it engages in, and controls instrumentalities of, interstate commerce, and it uses the mails. This corporate appellant and its subsidiaries are subsidiaries of the North American Company, a New Jersey corporation, registered as a holding company under the Act on February 25, 1937. The appellant Egan was president of the appellant Union Electric Company and of each of its several subsidiaries.

The indictment is in eight counts. Count 1 charges the appellants, hereinafter called defendants, together with Frank J. Boehm and Albert C. Laun (neither of whom was indicted), and "other persons to the Grand Jurors unknown" with conspiracy (18 U. S.C.A. § 88) to violate § 12(h) of the Public Utility Holding Company Act of 1935, 15 U.S.C.A. § 79l(h). Counts 2 to 8 inclusive charge substantive offenses in violation of § 12(h). Egan was found guilty and sentenced under Count 1, and not guilty under Counts 2 through 8. Union Electric was found guilty and sentenced under each and all counts of the indictment.

The parties filed separate motions for mistrial, for directed verdicts and for new trials in the district court, all of which were overruled. On these appeals both parties contend (1) that § 12(h) of the Act is unconstitutional, and (2) that the trial court erred (a) in refusing to direct verdicts of acquittal, (b) in the admission

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and exclusion of evidence, and (c) in the refusal and the giving of instructions

Section 12(h) of the Public Utility Holding Company Act of 1935 reads:

"It shall be unlawful for any registered holding company, or any subsidiary company thereof, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, directly or indirectly —

"(1) to make any contribution whatsoever in connection with the candidacy, nomination, election or appointment of any person for or to any office or position in the Government of the United States, a State, or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing; or

"(2) to make any contribution to or in support of any political party or any committee or agency thereof.

"The term `contribution' as used in this subsection includes any gift, subscription, loan, advance, or deposit of money or anything of value, and includes any contract, agreement, or promise, whether or not legally enforceable, to make a contribution."

1. Constitutionality of § 12(h). — The defendants do not deny that Congress may by appropriate legislation prohibit contributions to candidates for federal offices; but they contend that it is beyond the power of Congress to prohibit contributions by public utility holding companies, registered under the Act, to political parties or to candidates for nonfederal offices; that the invalid provisions of § 12(h) applicable to nonfederal candidates cannot be separated from the provisions applicable to federal candidates without destroying the whole purpose and aim of the Act, and that, therefore, all the prohibitions against political contributions are invalid. If the provisions of the section applicable to candidates for nonfederal offices are found to be valid it will be unnecessary to discuss the separability of the section.

The defendants say the provisions of § 12(h) are beyond the powers of Congress because political contributions are not commerce; that they are not per se evil; that they have no relation to the carriage of the mails; that they have no substantial effect upon interstate commerce; that the prohibitions are invalid because they apply to all political contributions regardless of size or whether they have any effect upon interstate commerce; that § 12(h) is an attempt by Congress to regulate state elections and that by prohibiting contributions "otherwise" than by use of the mails or instrumentalities of interstate commerce the statute covers campaign contributions however or wherever made to nonfederal candidates; and that Congress made no finding that contributions made "otherwise" have any relation to interstate commerce.

In the case of Electric Bond & Share Co. v. Comm., 303 U.S. 419, 58 S.Ct. 678, 681, 82 L.Ed. 932, 115 A.L.R. 105, the Supreme Court held that §§ 4(a) and 5 of the Public Utility Holding Company Act of 1935, 15 U.S.C.A. §§ 79d(a), 79e, are valid constitutional regulations. The Court there held that a public utility holding company system carrying on operations in two or more states, transmitting energy across state lines for its own account and for sale, and distributing its securities to the public, is engaged in activities which bring it "within the ambit of congressional authority." The Court also held that the "various groups of regulations contained in the Act, as well as particular provisions of each group should be regarded as separable so that, if any such group or provision should be found to be invalid, that invalidity should not extend to the remaining parts if by reason of their nature and as a practical matter they could be separately sustained and enforced." It is necessary, therefore, to consider the question of the validity of § 12(h).

The proposition that political contributions are not commerce and are not subject to regulation by Congress is not a valid objection to the Act. The commerce power extends to every activity, intrastate or interstate, which so affects interstate commerce, or the exercise of power over it, as to make regulation of such activity an "appropriate means to the attainment of a legitimate end." United States v. Wrightwood Dairy Co., 315 U.S. 110, 119, 62 S.Ct. 523, 526, 86 L.Ed. 726. The only question in such a case is whether the means adopted are appropriate to the attainment of the end. Congress having decided upon a legitimate end to be attained and a policy adapted to its attainment may choose the means for its accomplishment. Wickard v. Filburn, 317 U.S. 111, 124, 63 S.Ct. 82, 87 L.Ed. ___; United States v. Darby, 312 U.S. 100, 118 et seq., 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430; United States v.

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Lowden, 308 U.S. 225, 60 S.Ct. 248, 84 L.Ed. 208; Mulford v. Smith, 307 U.S. 38, 48, 59 S.Ct. 648, 83 L.Ed. 1092; Virginian R. Co. v. System Federation, 300 U.S. 515, 553, 57 S.Ct. 592, 81 L.Ed. 789; Electric Bond & Share Co. v. Comm., supra. Here the prohibitions of § 12(h) are a means only adopted by Congress for attaining an end considered legitimate, namely, the effective exercise of the power to regulate interstate commerce

The arguments that political contributions are not per se evil; that § 12(h) fails to distinguish between trivial and large contributions; and that it is an attempt to regulate state and local elections are all without weight. It is axiomatic that an innocent means may be used for an evil purpose. The fact that a contribution may be trivial is not enough to remove the contributor from the scope of federal regulation when the sum of all such contributions may be far from trivial. Wickard v. Filburn, 317 U.S. 111, 127, 128, 63 S.Ct. 82, 87 L.Ed. ___. The prohibitions of § 12(h) do not, and clearly are not intended to, interfere with voting or with control over the state's regulation of elections.

The contention that political contributions do not affect rates to consumers and, therefore, do not affect interstate commerce is equally without merit. If such contributions are considered as costs of operation, or if they are disguised on the books of the utility company as operating costs, they will affect rates. In this connection it is argued that the evidence shows that contributions and use of the company's money were favorable to the interest of consumers for the reason that by this means bills disadvantageous to the utility were defeated in the Missouri legislature and bills advantageous to its interests were passed, resulting in a saving to the company of approximately two and one-half millions of dollars annually. It is for the Congress, however, and not the courts, to estimate whether the influencing of legislatures by means of contributions to candidates for office is harmful to the public interest, even though admittedly beneficial to an individual or a class.

Whether the jury might have found the particular defendants in this case guilty, or not guilty, the...