Rice v. Santa Fe Elevator Corporation Illinois Commerce Commission v. Same, Nos. 470 and 472

CourtUnited States Supreme Court
Writing for the CourtDOUGLAS
Citation331 U.S. 218,91 L.Ed. 1447,67 S.Ct. 1146
PartiesRICE et al. v. SANTA FE ELEVATOR CORPORATION et al. ILLINOIS COMMERCE COMMISSION et al. v. SAME
Docket NumberNos. 470 and 472
Decision Date05 May 1947

331 U.S. 218
67 S.Ct. 1146
91 L.Ed. 1447
RICE et al.

v.

SANTA FE ELEVATOR CORPORATION et al. ILLINOIS COMMERCE COMMISSION et al. v. SAME.

Nos. 470 and 472.
Argued Feb. 13, 14, 1947.
Decided May 5, 1947.

[Syllabus from pages 218-220 intentionally omitted]

Page 220

Mr. William C. Wines, of Chicago, Ill., for petitioner Illinois Commerce Commission.

Mr. Lee A. Freeman, of Chicago, Ill., for petitioner Rice.

Mr. Leo F. Tierney, of Chicago, Ill., for respondents.

Mr. Justice DOUGLAS delivered the opinion of the Court.

Respondents in these two cases are warehousemen engaged in the business of operating public warehouses for the storage of grain in Illinois. Their warehouses are operated under licenses issued by the Secretary of Agriculture pursuant to the United States Warehouse Act, 39 Stat. 486, as amended, 7 U.S.C. § 241 et seq., 7 U.S.C.A. § 241 et seq. The Rice partnership, one of the petitioners, is an owner, shipper, and dealer in grain and is a customer of respondents. The Illinois Commerce Commission, another petitioner, has certain regulatory jurisdiction, to which we will later refer, over public grain warehouses and other public utility companies.

In 1944 Rice filed a complaint with the Commission, charging respondents1 with maintaining unjust, unreason-

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able, and excessive rates and charges contrary to the Illinois Public Utilities Act, Ill.Rev.Stats.1945, ch. 111 2/3. It charged them with discrimination in storage rates in favor of the Federal Government and its agencies and against other customers, contrary to the Public Utilities Act and the Illinois Grain Warehouse Act, Ill.Rev.Stats.1945, ch. 114, § 189 et seq. It alleged that respondents were both warehousemen and dealers in grain and by reason of those dual and conflicting positions had received undue preferences and advantages to the detriment of and in discrimination against petitioners and other customers of respondents,2 all in violation of provisions of the Public Utilities Act, the Grain Warehouse Act, or the Illinois Constitution of 1870, Article XIII, Smith-Hurd Stats. It charged respondents with having failed to provide reasonable, safe, and adequate public grain warehouse service and facilities, with issuing securities, with abandoning service, and with entering into various contracts with

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their affiliates without prior approval of the Commission; with rendering storage and warehousing services without having filed and published their rates; with operating without a state license; and with mixing public grain with grains of different grades—all in violation of provisions of the Public Utilities Act or the Grain Warehouse Act. Among the remedies sought were the fixing of just, reasonable, and non-discriminatory rates, the prohibition of unlawful discriminatory practices, the establishment of reasonable, safe and adequate storage and warehousing service, and the assessment of penalties for violaions of Il linois law, including the cancellation of grain warehouse licenses.

Respondents moved to dismiss on the ground that the United States Warehouse Act superseded the authority of the Commission to regulate in the manner sought by the complaint. The Commission denied the motion and set the cause for a hearing on the merits. Thereupon respondents brought these suits in the District Court to enjoin further proceedings before the Commission and to enjoin the Attorney General of Illinois from instituting any proceedings against respondents to enforce any order of the Commission in the matter. Motions of petitioners to dismiss were granted. On appeal the Circuit Court of Appeals reversed, holding that the United States Warehouse Act superseded state regulation of respondents as to the matters presented in petitioners' complaint.3 7 Cir., 156 F.2d 33. The cases are here on petitions for writs of certiorari which we granted because of the public importance of the questions presented.

The United States Warehouse Act, as originally enacted in 1916 (39 Stat. 486), made federal regulation in this field subservient to state regulation. It provided in § 29 that 'nothing in this act shall be construed to conflict

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with, or to authorize any conflict with, or in any way to impair or limit the effect or operation of the laws of any State relating to warehouses, warehousemen * * *.' And § 6 required an applicant for a federal warehouse license to provide a bond 'to secure the faithful performance of his obligations as a warehouseman' under state as well as under federal law.

In 1931 Congress amended the Act. 46 Stat. 1463. Section 29 was amended4 to provide that although the

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Secretary of Agriculture 'is authorized to cooperate with State officials charged with the enforcement of State laws relating to warehouses, warehousemen', and their personnel, 'the power, jurisdiction, and authority conferred upon the Secretary of Agriculture under this act shall be exclusive with respect to all persons securing a license hereunder so long as said license remains in effect.' Section 6 was amended to omit the requirement that the bond be conditioned on compliance with requirements of state law.

First. The chief matters which are the basis of the complaint before the Commission are treated as follows by the Illinois law and by the Federal Act:

(1) Just and reasonable rates. The complaint charges that respondents' rates are unjust and unreasonable. Under the Illinois statute public utility rates must be just and reasonable; and the Commission after a hearing may fix rates which meet that standard. §§ 32, 36, 41, Public Utilities Act. The Secretary of Agriculture is authorized by the Federal Act to license warehousemen5 on condition that they conform to the requirements of the Act and the rules and regulations prescribed thereunder.6 §§ 4, 9. Every receipt of a licensed warehouse must disclose 'the rate of storage charges.' § 18(e). Before a license is granted the applicant must file his proposed rates with the Secretary. Reg. 5, § 3. He must also file

Page 225

any proposed changes in rates before making them effective. Id. Rates which are 'unreasonable or exorbitant' are prohibited. Id. And the Secretary may, after hearing, suspend or revoke the license if 'unreasonable or exorbitant charges have been made for services rendered.' § 25; Reg. 2, § 7.

(2) Discrimination. The complaint alleges that respondents discriminate against the public and in favor of the Federal Government and its agencies by granting the latter preferential storage rates. The power of the Illinois Commission to fix rates, to which we have referred, includes the power to eliminate discriminatory rates. And see Gran Warehouse Act § 15. The Federal Act requires the publication and disclosure of licensed warehousemen's rates, as we have seen. Section 13 of the Federal Act makes it the duty of a licensed warehousean to rece ive agricultural products for storage 'in the usual manner in the ordinary and usual course of business, without making any discrimination between persons desiring to avail themselves of warehouse facilities.' And by § 25 the Secretary is granted authority to suspend or revoke any license of a warehouseman 'for any violation of or failure to comply with any provision of this act * * *.'

(3) Dual position of warehousemen. The complaint charged violations of Illinois law by acts of respondents in storing and dealing in their own grain while storing grain for the public. See Hannah v. People, ex rel. Attorney General, 198 Ill. 77, 64 N.E. 776. The Federal Act requires every receipt issued for agricultural products by a licensed warehouseman to disclose 'if the receipt be issued for agricultural products of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership * * *.' § 18(i). In addition, the receipts for grain must contain 'in event the relationship existing between the warehouseman and any depositor is not that of strictly disinterested custodianship, a statement setting forth the

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actual relationship. * * *' Reg. 4, § 1(a)(3). Moreover, § 5a(7) of the Commodity Exchange Act, 49 Stat. 1491, 1498, 7 U.S.C. § 7a(7), 7 U.S.C.A. § 7a(7), provides that receipts issued under the United States Warehouse Act 'shall be accepted in satisfaction of any futures contract * * * without discrimination and notwithstanding that the warehouseman issuing such receipts is not also licensed as a warehouseman under the laws of any State or enjoys other or different privileges than under State law * * *.'

(4) Mixing high quality public grain with inferior grain owned by respondents, delay in loading grain. The complaint charges that these practices7 are part of the abuses flowing from the conflicting positions of respondents as public grain warehousemen and dealers in grain. They are alleged to violate the rule of Hannah v. People, supra, and provisions of the Public Utilities Act which prohibit any preference or advantage to any person and which disallow any act of prejudice or disadvantage to any person. § 38. And see Grain Warehouse Act § 17. Section 13 of the Federal Act, as we have seen, provides that every licensed warehouseman 'shall receive for storage' any agricultural product 'without making any discrimination between persons desiring to avail themselves of warehouse facilities.' Section 15 provides for the inspection and grading of fungible agricultural products by federal inspectors. Section 16 permits licensed warehousemen 'if authorized by agreement or by custom' to mingle fungible products with other products 'of the same kind and grade.' Section 16 likewise prohibits the mixing of fungible products 'of different grades.'8 Section 30 provides fine and imprisonment for any person who fraud-

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ulently classifies, grades, or weighs any agricultural product stored under the provisions of the Act. Section 21 provides that a...

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