FARMERS'GIN CO. v. Hayes, Civ. No. 1296.

• Decision Date: 28 December 1943
• Docket Number: Civ. No. 1296.
• Citation: 54 F. Supp. 47
• Parties: FARMERS' GIN CO. v. HAYES, State Director, Office of Price Administration of Oklahoma. BROWN, Price Administrator of Office of Price Administration, v. FARMERS' GIN CO. et al.
• Court: U.S. District Court — Western District of Oklahoma

54 F. Supp. 47

FARMERS' GIN CO. v. HAYES, State Director, Office of Price Administration of Oklahoma.

BROWN, Price Administrator of Office of Price Administration, v. FARMERS' GIN CO. et al.

Civ. No. 1296.

District Court, W. D. Oklahoma.

December 28, 1943.

Hatcher & Bond, of Chickasha, Okl., for plaintiff.

O. K. Wetzel, of Oklahoma City, Okl., for Office of Price Administration, defendant and intervener.

Melton, McElroy & Vaughn, of Chickasha, Okl., and Snyder & Lybrand and Floyd Green, Gen. Counsel for Corporation Commission, all of Oklahoma City, Okl., for defendants in intervention.

VAUGHT, District Judge.

In the original complaint filed by the Farmers' Gin Company, a corporation, against Rex A. Hayes, State Director, Office of Price Administration for the State of Oklahoma, the plaintiff alleges that it is a corporation organized and existing under and pursuant to the laws of the State of Oklahoma; that it is engaged in the business of ginning cotton for the general public in said state and has its principal place of business at Watonga, Blaine County, Oklahoma, where it operates a cotton gin; that the defendant Hayes is the duly appointed, acting and qualified state director of the Office of Price Administration for the State of Oklahoma, and resides in and has his office and place of business in Oklahoma City, Oklahoma; that he holds his appointment under Prentiss M. Brown, Administrator of the Office of Price Administration, pursuant to Chapter 26, Title II, sec. 201 of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix § 921; that under the statutes of the State of Oklahoma requiring a showing of public necessity as a condition precedent to the issuance of a permit, the plaintiff is required to comply with the laws of Oklahoma and the rules and regulations of the Corporation Commission of Oklahoma, which it has done and is the holder and owner of certificate of public convenience and necessity No. 1101 dated September 19, 1930, issued by the Corporation Commission of the State of Oklahoma pursuant to law.

That cotton gins are declared by the Oklahoma statutes to be public utilities and their operation for the purpose of ginning seed cotton is declared to be a public business, and that no one is permitted to operate a cotton gin for such purpose without securing a permit from the Corporation Commission; that the Corporation Commission is given the same powers of regulation and control over cotton gins in Oklahoma that it has with respect to transportation and transmission companies, and has the sole and exclusive power to fix the charges and rates of cotton gins in Oklahoma; that the Corporation Commission may deny the permit to a cotton gin where there is no public necessity for it and may grant a certificate only after a showing is made that such plant is a needed utility; that the right to operate a cotton gin and to collect tolls therefor, as provided by the Oklahoma statutes, is a franchise granted by the state in consideration of the performance of a public service and as such it constitutes a property right within the protection of the Fourteenth Amendment to the Constitution of the United States.

That the production of cotton is one of the chief industries of the State of Oklahoma and is of such paramount importance that the general welfare and prosperity of the state in a very large and real sense depend upon its maintenance; that cotton ginning is a process which must take place before the cotton is in a condition for market; that the individual grower of the raw product is generally financially unable to set up a plant for himself and the service is a necessary one with which, ordinarily, he cannot dispense; that he is compelled to resort for such service to the ginning facilities which operate in his locality; that the relation between the grower of cotton and cotton gins is a peculiarly close one in respect of an industry of vital concern to the general public; and that the business of ginning cotton in Oklahoma has been devoted to a public use since 1915.

The complaint further alleges that the Inflation Control Act of 1942, Chapter 578, sec. 1, 56 Stat. 765, 50 U.S.C.A.Appendix § 961, provides: "* * * That no common carrier or other public utility shall make any general increase in its rates or charges which were in effect on September 15, 1942, unless it first gives thirty days notice to the President, or such agency as he may designate, and consents to the timely intervention by such agency before the Federal, State, or municipal authority having jurisdiction to consider such increase." That pursuant to said provision, on July 3, 1943, Horace Hayden, secretary of the Oklahoma Cotton Ginners Association, Inc., of which such association the plaintiff is a member, gave notice pursuant to law to the Transportation and Public Utility Division, Office of Price Administration, Washington, D. C., the agency designated to receive such notice, advising it that the cotton ginners of Oklahoma, acting through their association, would apply to the Corporation Commission for an increase in rates for ginning cotton in the State of Oklahoma for the 1943 season. That on August 16, 1943, after proper notice and the taking of evidence and after an open hearing, in which the Administrator appeared as amicus curiae, the Corporation Commission, pursuant to its authority vested by the Constitution and the laws of Oklahoma, issued its Order No. 16,588, fixing the ginning rates for cotton in Oklahoma for the 1943-1944 ginning season at 32½ cents per cwt. for picked cotton, 35 cents per cwt. for snapped or bollie cotton, and $2 per pattern for bagging and ties; that the Administrator has issued an order, designated Maximum Price Regulation No. 211, fixing the maximum prices or rates for cotton ginning services at 25 cents per cwt. for ginning picked cotton, 27½ cents per cwt. for ginning bollies or snapped cotton, and $1.50 for bagging and ties. That said rates are far below the rates fixed by the Corporation Commission and that the Administrator is attempting to enforce his rates and prevent compliance by the plaintiff with the rates fixed by the Corporation Commission.

The plaintiff asks for injunctive relief against the Administrator and the State Director, enjoining them from enforcing or attempting to enforce Maximum Price Regulation No. 211, as above set out, and for further relief.

A hearing was had on the application for a temporary injunction, at which time it was agreed that no temporary injunction would issue but pending the filing and consideration of the application to intervene on the part of the Administrator, the status quo should be maintained; that the plaintiff in the meantime should charge the rates prescribed by the Corporation Commission, but should keep an accurate account and retain all sums charged in excess of the rates prescribed by the Administrator, to await final determination in this case.

Thereafter, on September 7, 1943, the Administrator was granted permission to file a complaint in intervention, which complaint was duly filed wherein the intervener made additional parties defendant various cotton gins in Oklahoma and the members of the Corporation Commission and the Corporation Commission as a body. The substance of the intervention is that the Administrator had the power, under the Emergency Price Control Act of 1942, supra, to fix rates for ginning cotton in the State of Oklahoma and that the regulation which it issued pursuant to said Act superseded the rates prescribed by the Corporation Commission, and sought a restraining order and a preliminary injunction against all of said defendants, including the Corporation Commission, enjoining them from enforcing, or complying with, the rates prescribed by the Corporation Commission, and prayed that this court convene a three-judge court to hear an application for injunction. 54 F.Supp. 43.

A three-judge court was convened, heard the application, the evidence having been stipulated, and, in a special opinion, held that it was without jurisdiction for the reason that it did not appear that the Administrator sought to enjoin the enforcement of the order of the Corporation Commission on the ground that it was unconstitutional, or issued under a statute that was unconstitutional, but that there was merely a conflict between the order of the Corporation Commission and a federal statute, or a regulation issued pursuant to a federal statute.

At the time of the hearing before the three-judge court, it was stipulated that the evidence be introduced and arguments heard both on the jurisdiction of the three-judge court, and the merits of the case. That in the event it was determined by the three-judge court that it was not a proper case for said court, then the evidence introduced and the arguments heard on the merits be considered by the district court to the same extent as if no three-judge court had been convened and the matter had been set before the district court originally. The opinion rendered by the three-judge court is self-explanatory of the reasons for refusing jurisdiction by that court.

The one issue in this case is whether the order of the Corporation Commission or the regulation issued by the Administrator is controlling.

As stated above, cotton gins have been declared by statute to be public utilities in the State of Oklahoma, since 1915. The Constitution of Oklahoma provides as follows:

Article IX, Sec. 18: "The Commission (Corporation Commission) shall have the power and authority and be charged with the duty of supervising, regulating and controlling all transportation and transmission companies doing business in this State, in all matters relating to the performance of their public duties and their charges therefor, and of correcting abuses and preventing unjust discrimination and extortion by such companies; and to that end the Commission shall, from time to time, prescribe and enforce...