Oklahoma Packing Co v. Oklahoma Gas Electric Co

• Citation: 84 L.Ed. 537,60 S.Ct. 215,309 U.S. 4
• Decision Date: 15 January 1940
• Docket Number: No. 19,19
• Parties: OKLAHOMA PACKING CO. et al. v. OKLAHOMA GAS & ELECTRIC CO. et al.*
• Court: United States Supreme Court

309 U.S. 4

60 S.Ct. 215

84 L.Ed. 537

OKLAHOMA PACKING CO. et al.

v OKLAHOMA GAS & ELECTRIC CO. et al.*

No. 19.

Decided Jan. 15, 1940.

Rehearing Denied Jan. 29, 1940.

See 309 U.S. 693, 60 S.Ct. 465, 84 L.Ed. —-.

Messrs. Paul Ware and W. R. Brown, both of Chicago, Ill., for petitioners.

Messrs. I. J. Underwood, of Tulsa, Okl., and Streeter B. Flynn, of Oklahoma City, Okl., for respondents.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

The case concerns a rate controversy which has been winding its slow way through state and federal courts for thirteen years.¹ While the relationship of two utilities with Wilson & Co., a consumer of natural gas, complicates the situation, the legal issues before us may be disposed of as though this were a typical case of a utility resisting an order reducing its rates.² Oklahoma Gas & Electric Company (hereafter called Gas & Electric) appealed to the Oklahoma Supreme Court from such an order by the Oklahoma Corporation Commission. The reduction was stayed pending the appeal, but to protect Wilson & Co. against a potential overcharge, Gas & Electric gave a supersedeas bond. Gas & Electric lost its appeal, Oklahoma Gas & Electric Co. v. Wilson & Co., 146 Okl. 272, 288 P. 316, and Wilson & Co. brought suit on the bond. That suit was instituted on December 3, 1931, in one of the district courts of Oklahoma. To enjoin prosecution of the latter suit Gas & Electric on May 20, 1932, invoked the jurisdiction of the United States District Court for the Western District of Oklahoma.³ After a complicated series of moves in both state and federal courts, not necessary here to detail, this relief was granted by the District Court on September 10, 1937, and on December 19, 1938, sustained by the Circuit Court of Appeals. Oklahoma Packing Co. v. Oklahoma Gas & Electric Co., 10 Cir., 100 F.2d 770. Since the case in part was in conflict with the Second Circuit's decision in Neirbo Co. v. Bethlehem Shipbuilding Corp., 103 F.2d 765, and also presented novel aspects of important questions of federal law, we granted certiorari, 306 U.S. 629, 59 S.Ct. 789, 83 L.Ed. 1032. We are not concerned with the merits of the Commission's order.

At the threshold we are met by the procedural objection, seasonably made, that Wilson & Co., a Delaware corporation, was improperly sued in the District Court of the Western District of Oklahoma. The objection is unavailable. Prior to this suit, Wilson & Co. had, agreeable to the laws of Oklahoma, designated an agent for service of process 'in any action in the State of Oklahoma.' Both courts below found this to be in fact a consent on Wilson & Co.'s part to be sued in the courts of Oklahoma upon causes of action arising in that state. The Federal District Court is, we hold, a court of Oklahoma within the scope of that consent, and for the reasons indicated in Neirbo Co. et al. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, decided November 22, 1939, Wilson & Co. was amenable to suit in the Western District of Oklahoma.

Petitioners further urge (1) that their plea of res judicata should have been sustained, and (2) that § 265 of the Judicial Act, Act of March 3, 1911, 36 Stat. 1162, 28 U.S.C. § 379, 28 U.S.C.A. § 379, derived from § 5 of the Act of March 2, 1793, 1 Stat. 333, 335, was a bar to the suit.

The claim of res judicata is based on the prior determination in 1930 by the Supreme Court of Oklahoma that the contested order of the Corporation Commission was valid. Oklahoma Gas & Electric Co. v. Wilson & Co., 146 Okl. 272, 288 P. 316. The pronouncements of the Oklahoma Supreme Court concerning the character of such a determination—whether under the Oklahoma Constitution it was a 'legislative' or 'judicial' review—have for a time, however, been ambiguous and fluctuating. After the present bill was filed but before the challenged injunction was decreed, the Oklahoma Supreme Court had held that its decision in cases like that of Oklahoma Gas & Electric Co. v. Wilson & Co., was a judicial judgment. Oklahoma Cotton Ginners' Association v. State, 174 Okl. 243, 51 P.2d 327. But, in Community Natural Gas Co. v. Corporation Commission, 182 Okl. 137, 76 P.2d 393, decided after the decree here in issue, the Oklahoma court formally characterized its review in cases prior to the decision in the Ginners' case as 'legislative', re- fused to give that decision retroactive effect, and therefore deemed the res judicata doctrine inapplicable to these prior reviews. Hence, the plea of res judicata in this case must fail, for on that issue state law is determinative here. Union & Planters' Bank v. Memphis, 189 U.S. 71, 23 S.Ct. 604, 47 L.Ed. 712; City of Covington v. First National Bank, 198 U.S. 100, 25 S.Ct. 562, 49 L.Ed. 963; Wright v. Georgia R.R. & Banking Co., 216 U.S. 420, 30 S.Ct. 242, 54 L.Ed. 544.

There remains, therefore, the applicability of § 265 of the Judicial Code. ⁴ That provision would operate as a bar upon the power of the District Court to enjoin proceedings previously brought in the state court on the supersedeas bond, if 'the only thing sought to be accomplished by this equitable action' is to stay the continuance of that action. Such was the construction placed upon the bill by the earlier District Court of three judges, and such was this Court's assumption when the latter decision came here on appeal. Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., D.C., 6 F.Supp. 893, 865; Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 292 U.S. 386, 389, 54 S.Ct. 732, 78 L.Ed. 1318. That case eliminated the Corporation Commission as party to the litigation. The District Court to which this Court remanded the matter summarized Gas & Electric's claim by way of answer to the action brought by Wilson & Co. in the state court as an attack upon the Commission's order 'for substantially the same reasons as set out' in the present bill.

The present suit, therefore, is one for an injunction 'to stay proceedings' previously begun in a state court. The decree below is thus within the plain interdiction of an Act of Congress, and not taken out of it by any of the exceptions which this Court has heretofore engrafted upon a limitation of the power of the federal courts dat- ing almost from the beginning of our history and expressing an important Congressional policy—to prevent needless friction between state and federal courts. Compare Madisonville Traction Co. v. St. Bernard Mining Co., 196 U.S. 239, 25 S.Ct. 251, 49 L.Ed. 462; Simon v. Southern Railway, 236 U.S. 115, 35 S.Ct. 255, 59 L.Ed. 492; Wells Fargo & Co. v. Taylor, 254 U.S. 175, 41 S.Ct. 93, 65 L.Ed. 205. See Warren, 'Federal and State Court Interference', 43 Harv.L.Rev. 345, 372-77. That the injunction was a restraint of the parties and was not formally directed against the state court itself is immaterial. Hill v. Martin, 296 U.S. 393, 403, 56 S.Ct. 278, 80 L.Ed. 293. Cf. Kohn v. Central Distributing Co., 306 U.S. 531, 59 S.Ct. 689, 83 L.Ed. 965. Steelman v. All Continent Corp., 301 U.S. 278, 57 S.Ct. 705, 81 L.Ed. 1085, pressed upon us by respondents and relied upon below, is plainly inapplicable.

Neither record nor findings below give any other basis for injunctive relief save the threatened injury implied in the state court lawsuit; and that could not be enjoined. The decree below is reversed, with directions to dismiss the bill.

Reversed.

The CHIEF JUSTICE, Mr. Justice McREYNOLDS and Mr. Justice ROBERTS adhere to the views expressed in their separate opinion in this case. See 60 S.Ct. 219.

The decision of the Supreme Court of Oklahoma in Community Natural Gas Co. v. Corporation Commission, 182 Okl. 137, 76 P.2d 393, having been brought to the attention of this Court for the first time in the petition of respondents for a rehearing of the disposition of this cause in the opinion delivered on December 4, 1939, that opinion is hereby withdrawn and replaced by the opinion of this day.

The petition for rehearing is denied.

Mr. Chief Justice HUGHES.

I concur in the reversal of the judgment upon the ground that Wilson & Co., a Delaware corporation, was not amenable to suit in the Federal District Court in Oklahoma. The question is essentially the same as that presented in No. 38, Neirbo v. Bethlehem Shipbuilding Corporation, 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167, decided November 22, 1939, and what was said in the dissenting opinion in that case need not be repeated here. See, as to the scope of the consent under the Oklahoma statute, the observations of the Circuit Court of Appeals in the Neirbo case, 2 Cir., 103 F.2d 765, 769.

But if it be granted that the Delaware corporation was amenable to the process in question, I am unable to agree that the complainants should be denied relief because of the defense of res judicata. The judgment to which this effect is given was rendered by the Supreme Court of Oklahoma in 1930, sustaining, on appeal, an order of the Corporation Commission requiring gas to be furnished to Wilson & Co. at a specified rate. Oklahoma Gas & Electric Co. v. Wilson & Co., 146 Okl. 272, 288 P. 316. At the time of that decision, the review by the Supreme Court of Oklahoma of such an order of the Corporation Commission was considered to be legislative in character. Oklahoma Gas Co. v. Russell, 261 U.S. 290, 291, 43 S.Ct. 353, 67 L.Ed. 659; McAlester Gas & Coke Co. v. Corporation Commission, 101 Okl. 268, 270, 224 P. 698; City of Poteau v. American Indian Oil & Gas Co., 159 Okl. 240, 242, 243, 18 P.2d 523, in which the state court cited with approval the decision to that effect of the Circuit Court of Appeals in Oklahoma Gas & Electric Co. v. Wilson & Co., 10 Cir., 54 F.2d 596, 598, 599, applying the Oklahoma decisions. Compare Oklahoma Gas & Electric Co. v. Oklahoma Packing Co., 292 U.S. 386, 388, 54 S.Ct. 732, 733, 78 L.Ed. 1318; Corporation Commission v. Cary, 296 U.S. 452, 458, 56 S.Ct. 300, 301, 80 L.Ed. 324. The contention of the...