In re Pennsylvania Gas Co.

• Decision Date: 28 January 1919
• Citation: 122 N.E. 260,225 N.Y. 397
• Parties: In re PENNSYLVANIA GAS CO.
• Court: New York Court of Appeals Court of Appeals

225 N.Y. 397

122 N.E. 260

In re PENNSYLVANIA GAS CO.

Court of Appeals of New York.

Jan. 28, 1919.

Appeal from Supreme Court, Appellate Division, Third Department.

In the matter of the application of the Pennsylvania Gas Company for a writ of prohibition, directed to the Public Service Commission, Second District, and to Alfred C. Davis and others, complainants, in a proceeding pending before said commission, entitled ‘In the Matter of the Complaint of Alfred C. Davis and Others, of Jamestown, N. Y., under Section 71 of the Public Service Commissions Law, against the Pennsylvania Gas Company,’ as to the price of natural gas charged to private consumers. From an order of the Appellate Division of the Supreme Court for the third department (184 App. Div. 556,171 N. Y. Supp. 1028), reversing an order of the Special Term (103 Misc. Rep. 37,169 N. Y. Supp. 820), which directed the issuance of an alternative writ of prohibition, the Pennsylvania Gas Company appeals. Order affirmed.

Marion H. Fisher, of Jamestown, and John E. Mullin, of Kane, Pa., for appellant.

Ledyard P. Hale, of Albany, for respondent Public Service Commission.

Louis L. Thrasher, of Jamestown, for respondents Davis and City of Jamestown.

CARDOZO, J.

The Pennsylvania Gas Company is a Pennsylvania corporation which supplies natural gas to the inhabitants of the city of Jamestown. Its gas fields and wells are in Pennsylvania, and its gas is conveyed to Jamestown through pipe lines. About 45 miles of line are in Pennsylvania and about 5 in New York. It has a branch office in Jamestown, and its mains and pipes are in the city's streets. Formerly its rates for gas were 30 cents a thousand. Recently it attempted to raise its rates to 35 cents, and filed a schedule with the Public Service Commission accordingly. A citizen of Jamestown, alleging that the new rates were ekorbitant, lodged a complaint with the commission. The gas company was directed to answer the complaint. It filed with the commission a demurrer to the jurisdiction which the commission overruled. Thereupon the company sued out a writ of prohibition. Its petition alleges that the attempted regulation of its rates is an unconstitutional interference with interstate commerce. The writ was granted at Special Term (103 Misc. Rep. 37,169 N. Y. Supp. 820) and vacated at the Appellate Division (184 App. Div. 556,171 N. Y. Supp. 1028). An appeal to this court followed.

[1][2] 1. We think the petitioner's business is ‘interstate commerce.’ There is no doubt that the transportation of oil or gas from state to state through the medium of pipe lines in commerce between the states. West v. Kansas Natural Gas Co., 221 U. S. 229, 31 Sup. Ct. 564, 55 L. Ed. 716,35 L. R. A. (N. S.) 1193;Haskell v. Kansas Natural Gas Co., 224 U. S. 217, 32 Sup. Ct. 442, 56 L. Ed. 738;Haskell v. Cowham, 187 Fed. 403, 109 C. C. A. 235. It is true that there is a distinction to be noted. What is regulated by this statute (Public Service Commissions Law [Consol. Laws, c. 48], § 65) is not the act of transportation; it is the sale of the thing transported (Manufacturers' Light & Heat Co. v. Ott [D. C.] 215 Fed. 940, 944). But the sale of commodities to be delivered by the seller in one state to the buyer in another is also interstate commerce. Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681, 34 L. Ed. 128;Savage v. Jones, 225 U. S. 501, 32 Sup. Ct. 715, 56 L. Ed. 1182; Int. Paper Co. v. Mass., 246 U. S. 135, 38 Sup. Ct. 292, 62 L. Ed. 624, Ann. Cas. 1918C, 617. It is therefore subject, like the business of transportation, to the power of the nation.

[3] Interstate commerce does not end until the subject-matter of the sale has been broken up or redistributed or absorbed in the common mass of property within the state. Leisy v. Hardin, supra. When that moment arrives is not always easy to determine. The test to be applied will vary with the method of transportation and the subject of the sale. The keg of beer transported from one state to another is withdrawn from interstate commerce when its contents are sold by the glass. Leisy v. Hardin, supra. Tobacco, imported in bulk, becomes subject to the plenary power of the states when the bulk is broken and the tobacco sold at retail. Rast v. Van Deman & Lewis Co., 240 U. S. 342, 362, 36 Sup. Ct. 370, 60 L. Ed. 679, L. R. A. 1917A, 421, Ann. Cas. 1917B, 455;Armour & Co. v. North Dakota, 240 U. S. 510, 517, 36 Sup. Ct. 440, 60 L. Ed. 771, Ann. Cas. 1916D, 548. But the rule of the ‘original package’ is not an ultimate principle. It is an illustration of a principle. It assumes transmission in packages, and then supplies a test of the unity of the transaction. If other forms of transmission are employed, there is need of other tests. Mutual film Corp. v. Ohio Ind. Comm., 236 U. S. 230, 241, 35 Sup. Ct. 387, 59 L. Ed. 552, Ann. Cas. 1916C, 296;Hall v. Geiger-Jones Co., 242 U. S. 539, 558, 37 Sup. Ct. 217, 61 L. Ed. 480, L. R. A. 1917F, 514, Ann. Cas. 1917C, 643. The telegram forwarded by the stock exchange in New York to the telegraph company in Boston, with the intention that the company shall transmit it to selected brokers, approved in advance by the exchange, does not lose its character as a subject of interstate commerce until it reaches the brokers' offices. W. U. Tel. Co. v. Foster, 247 U. S. 105, 38 Sup. Ct. 438, 62 L. Ed. 1006. The continuity of the transaction is not broken by the translation of the code message into English, by its transmission, thus translated, to subscribers, or even by the option, reserved by the telegraph company to refuse delivery to any one. W. U. Tel. Co. v. Foster, supra. The law does not ask itself what the parties ‘may’ do, but what, in the normal course of business, it is expected that they ‘will’ do. ‘If the normal, contemplated, and followed course is a transmission as continuous and rapid as science can make it from exchange to broker's office, it does not matter what are the stages or how little they are secured by covenant or bond.’ W. U. Tel. Co. v. Foster, supra, 247 U. S. at page 113, 38 Sup. Ct. at page 439, 62 L. Ed. 1006. The essential unity of the transaction remains the final test. Swift & Co. v. U. S., 196 U. S. 375, 399, 25 Sup. Ct. 276, 49 L. Ed. 518;Rearick v. Pennsylvania, 203 U. S. 507, 512, 27 Sup. Ct. 159, 51 L. Ed. 295.

Subjected to that test, the transactions of the petitioner's business have the unity and directness of interstate commerce. There is no break in the continuity of the transmission from pumping station in Pennsylvania to home and office and factory in Jamestown. A different question would arise if gas transmitted from Pennsylvania should be stored in reservoirs in New York, and then distributed to consumers as their needs might afterwards develop. The quantity stored or the period of storage might require us to hold that interstate commerce was at an end when the place of storage had been reached. Kehrer v. Stewart, 197 U. S. 60, 65, 25 Sup. Ct. 403, 49 L. Ed. 663;Brown v. Houston, 114 U. S. 622, 5 Sup. Ct. 1091, 29 L. Ed. 257. The transactions would then be similar to those common in the oil business. We do not now determine the rule that should govern them. It is enough to hold that where there is in substance no storage, but merely transmission for immediate or practically immediate use, direct from seller to consumer, interstate commerce does not end till the gas has reached its goal. That, by the fair intendment of the petition, is the business conducted by this petitioner. It is not important that consumers do not signify in advance the precise amount that they will need. If their wants are approximately known, and the gas is transmitted, not to be held, but to be used, so that any storage that results is merely casual and incidental, the transaction is to be treated as single and continuous. We must then say, in the language of Holmes, J., in W. U. Tel. Co. v. Foster, supra, that the transmission is ‘as continuous and rapid as science can make it.’

[4][5] 2. The question remains whether, in default of action by Congress, the attempted regulation is within the police power of the state.

The petitioner is a public service corporation. Its rates are subject to regulation by ‘some’ agency of government. Congress has never occupied the field of regulation, as it has done with railroads, the telegraph and telephone lines, and even the oil companies. Act to Regulate Commerce, as amended June 29, 1906 (chapter 3591, 34 Stat. 584), and June 18, 1910 (chapter 309, 36 Stat. 539). Gas and water companies are expressly excepted. In such circumstances, there is no implied exclusion of the police power of the states. The exercise of that power is, indeed, subject to conditions. It must not impose upon interstate commerce burdens new and direct rather than remote and incidental. Leisy v. Hardin, supra; Minnesota Rate Cases, 230 U. S. 352, 396, 400, 33 Sup. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18. It must not discriminate against foreign products. Brimmer v. Rebman, 138 U. S. 78, 11 Sup. Ct. 213,35 L. Ed. 862;Minn. Rate Cases, supra, 230 U. S. at page 401, 33 Sup. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18. It must not introduce diversity and conflict where there is need of uniformity and harmony. Cooley v. Board of Wardens, 12 How. 299, 319, 13 L. Ed. 996;Wabash, St. L. & P. R. Co. v. Ill., 118 U. S. 557, 7 Sup. Ct. 4, 30 L. Ed. 244;Covington & C. Bridge Co. v. Kentucky, 154 U. S. 204, 14 Sup. Ct. 1087, 38 L. Ed. 962;Minn. Rate Cases, supra, 230 U. S. at page 400,38 Sup. Ct. 729,57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18. But, subject to those conditions, the police power of the states survives, though the transactions brought within its grip are those of interstate commerce. Matters peculiarly of local concern are not ‘left to the unrestrained will of individuals because Congress has not acted.’ Minn. Rate Cases, supra, 230...