Munoz v. Porto Rico Ry. Light & Power Co.

Decision Date02 April 1936
Docket NumberNo. 3084.,3084.
Citation83 F.2d 262
CourtU.S. Court of Appeals — First Circuit
PartiesMUNOZ et al. v. PORTO RICO RY. LIGHT & POWER CO.

William Cattron Rigby, of Washington, D. C., and Miguel A. Munoz, of San Juan, P. R. (B. Fernandez Garcia, Atty. Gen., and Nathan R. Margold, Sol., Department of Interior, of Washington, D. C., on the brief), for appellants.

Carroll G. Walter, of New York City (Henri Brown, of San Juan, P. R., on the brief), for appellee.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

WILSON, Circuit Judge.

This is a bill in equity brought by the Porto Rico Railway Light & Power Company (hereinafter referred to as the Power Co.) to enjoin the enforcement of an order made by the Public Service Commission of Puerto Rico (hereinafter referred to as the Commission) requiring the Power Co. to reduce its rates for furnishing electric energy on the island of Puerto Rico.

Jurisdiction is based upon the ground that the case arises under a law of the United States, namely, the Act of Congress of March 2, 1917 (39 Stat. 951), known as the Organic Act of Puerto Rico, which, among other things, prohibits the enactment by Puerto Rico of any law depriving any person of property without due process of law, or denying any person equal protection of law, or impairing the obligation of contracts. Section 2, as amended (48 U.S.C.A. § 737).

Upon the filing of the bill the Power Co., upon the bill and supporting affidavits, moved for a preliminary injunction, and the Commission was ordered to show cause why a preliminary injunction should not issue pendente lite as prayed for in the bill. The Commission appeared by counsel and moved to dismiss the bill for want of jurisdiction. After hearing the parties upon both motions, the District Court on May 18, 1935, denied the motion to dismiss and granted the motion for preliminary injunction. The Commission on May 29, 1935, presented what is entitled "a petition for rehearing and dissolution of preliminary restraining order," in which they prayed for "rehearing" and that "the preliminary order of injunction be dissolved." The motion was denied on August 15, 1935.

On September 13, 1935, the Commission filed an appeal from the order of August 15, 1935, denying the defendants' motion for a rehearing and dissolution of the preliminary injunction, and also on that day filed an appeal from the decree of May 18, 1935, for a preliminary injunction, which were allowed September 16, 1935.

The Power Co. gave notice that upon the hearing of the appeal before this court a motion would be made to dismiss the appeal from the order of August 15, 1935, as unauthorized by law, and to strike from the record the new evidence tendered by the Commission in connection with their said petition to rehear and dissolve.

The appellants filed 54 assignments of error. Assignments Nos. 1, 2, 3, 11, 12, and 13 challenged the jurisdiction of the District Court below, which is the first question open for consideration.

It must be conceded, we think, that jurisdiction of the bill existed in the District Court of the United States for Puerto Rico under section 41 of the Organic Act of Puerto Rico (March 2, 1917, 39 Stat. 965, 48 U.S.C.A. § 863), unless it was taken away by the Act of Congress of May 14, 1934 (48 Stat. 775, 28 U.S.C.A. § 41(1, 1a), known as the Johnson Act.

Section 41 of the Organic Act for Puerto Rico (March 2, 1917, 48 U.S.C.A. § 863) provided as to the jurisdiction of the District Court of the United States for Puerto Rico as follows:

"Sec. 41. That Porto Rico shall constitute a judicial district to be called `the district of Porto Rico.' * * * The district court for said district shall be called `the District Court of the United States for Porto Rico.' * * * Such district court shall have jurisdiction of all cases cognizable in the district courts of the United States, and shall proceed in the same manner. * * * Said district court shall have jurisdiction of all controversies where all of the parties on either side of the controversy are citizens or subjects of a foreign State or States, or citizens of a State, Territory, or District of the United States not domiciled in Porto Rico, wherein the matter in dispute exceeds, exclusive of interest or cost, the sum or value of $3,000, and of all controversies in which there is a separable controversy involving such jurisdictional amount and in which all of the parties on either side of such separable controversy are citizens or subjects of the character aforesaid."

It will be noted that section 41 of the Organic Act of 1917 (48 U.S.C.A. § 863) provided that "such district court shall have jurisdiction of all cases cognizable in the district courts of the United States, and shall proceed in the same manner." We therefore turn to section 24, subd. 1 of chapter 231 of the Act of March 4, 1911 (36 Stat. 1091), now paragraph 1 of section 24 of the United States Judicial Code (28 U.S. C.A. § 41(1), to determine what cases are cognizable in the District Courts of the United States, which provides that the District Court shall have original jurisdiction as follows:

"First. Of all suits of a civil nature, at common law or in equity, brought by the United States, or by any officer thereof authorized by law to sue, or between citizens of the same State claiming lands under grants from different States; or, where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, and (a) arises under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, or (b) is between citizens of different States, or (c) is between citizens of a State and foreign States, citizens, or subjects."

There is nothing in this section or in the act which expressly extends its provisions to Puerto Rico. It was adopted by reference in section 41 of the Organic Law of 1917. Congress, it is clear, has never understood that in defining the jurisdiction of the courts of the United States it was defining the jurisdiction of the District Court of the United States for Puerto Rico, which is not a true United States court established under article 3 of the Constitution of the United States, but is a territorial court created by virtue of the power given to Congress by article 4, § 3, cl. 2, of the Constitution to make all needful rules and regulations respecting territory belonging to the United States. Balzac v. Porto Rico, 258 U.S. 298, 312, 42 S.Ct. 343, 66 L.Ed. 627.

Congress has always defined the jurisdiction of the District Court of the United States for Puerto Rico by acts expressly applicable to that court.

In the first Organic Act known as the Foraker Act, enacted April 12, 1900 (31 Stat. 77, 48 U.S.C.A. § 863 note), Congress created a District Court of the United States for Puerto Rico, and provided that it should have the ordinary jurisdiction of District Courts of the United States and jurisdiction of all cases cognizable in the Circuit Court of the United States, and should proceed in the same manner as a Circuit Court.

By the Act of March 2, 1901, chap. 812, § 3 (31 Stat. 953, 48 U.S.C.A. § 863 note), Congress extended the jurisdiction of the District Court of the United States for Puerto Rico to embrace all controversies where the parties or either of them are citizens of the United States, or citizens or subjects of a foreign state or states, wherein the matter in dispute exceeds, exclusive of costs, the sum or value of $1,000.

The abolishment of the Circuit Courts of the United States in 1911 and the transfer of their jurisdiction to the District Courts of the United States has never been held to affect the jurisdiction of the District Court of the United States for Puerto Rico. When Congress passed the Jones Act in 1917, it defined again the jurisdiction of the District Court of the United States for Puerto Rico in section 41 of that act (48 U.S.C.A. § 863), in which it provided that the District Court of the United States for Puerto Rico shall have jurisdiction of all cases cognizable in the District Courts of the United States, and of all controversies where all of the parties on either side of the controversy are citizens or subjects of a foreign state or states, or citizens of a state, territory, or district of the United States, not domiciled in Puerto Rico, wherein the matter in dispute exceeds, exclusive of interests or costs, the sum of $3,000, thus preserving in all cases a distinction between the territorial District Court for Puerto Rico and the District Courts of the United States in the strict sense of those words.

A change was made in the procedure in the District Courts of the United States in 1910, section 266 of the Judicial Code, 28 U.S.C.A. § 380, by providing that, in case an interlocutory injunction is asked for, suspending or restraining the enforcement, operation, or execution of any statute of a state by restraining the action of any officer of such state in the enforcement or execution of such statute, upon the ground of the constitutionality of such statute, the same shall be heard by three judges, one of whom, at least, shall be a Justice of the Supreme Court or a Circuit Judge, and the other two shall be either Circuit or District Judges.

It was held by this court in Benedicto et al. v. West India & Panama Telegraph Co., 256 F. 417, 419, that this act did not apply to Puerto Rico. This court said:

"Our view of section 266 of the Judicial Code of the United States is that its purpose was to prevent inordinate and precipitate federal interference with statutes and Constitutions of the states of the Union, which under their relations with the federal government are broadly administering their own laws, in a very substantial sense, as independent sovereignties. * * *

"Section 266, which we are considering, is, of course, so far as the states of the federal Union are concerned, a limitation upon the usual course of equity...

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