State ex rel. Bd. of R. Com'rs of State v. Stanolind Pipe Line Co.

• Decision Date: 20 June 1933
• Docket Number: No. 41579.,41579.
• Citation: 216 Iowa 436,249 N.W. 366
• Parties: STATE ex rel. BOARD OF R. COM'RS OF STATE OF IOWA v. STANOLIND PIPE LINE CO.
• Court: Iowa Supreme Court

216 Iowa 436

249 N.W. 366

STATE ex rel.BOARD OF R. COM'RS OF STATE OF IOWA

v.STANOLIND PIPE LINE CO.

No. 41579.

Supreme Court of Iowa.

June 20, 1933.

Appeal from District Court, Lee County; John E. Craig, Judge.

This action was commenced by the State of Iowa on October 27, 1931, to enforce, as against the defendant, Stanolind Pipe Line Company, a corporation, the provisions of chapter 383-D1 of the 1931 Code (sections 8338-d1 to 8338-d30). The basis of the action is the defendant's failure to comply with the chapter by obtaining a permit to do business in Iowa. Consequently the State asks: First, that the defendant be restrained from further constructing pipe lines in Iowa without first procuring a permit from the Board of Railroad Commissioners; second, that the defendant be required, by a mandatory injunction, to take the pipe lines already constructed out of service; and, third, that the defendant be restrained from the operation of its constructed pipe lines for the transportation and transmission of gas, gasoline, oils, or motor fuel until it has complied with the statutes contained in the chapter above named. It is said by the State that “there exists a dangerous hazard to the public and private property, life, and well-being of the citizens of Iowa.” There was a trial in the district court, which resulted in a judgment denying the relief prayed by the State, and dismissing its petition. From that judgment, the State appeals.

Affirmed.J. H. Henderson, Commerce Counsel, and Stephen Robinson, Asst. Commerce Counsel, both of Des Moines, for appellant.

Parrish, Cohen, Guthrie & Watters, of Des Moines, and G. H. Woodward, of Tulsa, Okl., for appellee.

KINDIG, Chief Justice.

The defendant-appellee, Stanolind Pipe Line Company, is a foreign corporation operating a pipe line system for a distance of approximately eighteen miles over the southeastern corner of Iowa. This pipe line system is a trunk line, extending from the Mid-Continent oil fields of Oklahoma and Texas to refineries at Whiting, Ind. Through this line, the appellee transports crude petroleum exclusively in interstate commerce. No part of the oil thus transported is received or discharged within the state of Iowa. There is no controversy over the proposition that the appellee company, in operating the pipe line, is engaged exclusively in interstate commerce. In constructing its system in Iowa the appellee has purchased a private right of way from private property owners, and, in conjunction therewith, uses public highways and public property of the state.

According to the stipulation of the parties, the “pipe lines (are) located (across) the tracks of the Chicago, Rock Island & Pacific Railway Company, the tracks of the Chicago, Burlington & Quincy Railroad Company, U. S. Highway No. 161, a paved highway, U. S. Highway No. 61, one primary graveled road, thirteen secondary roads, the Des Moines River, the Mississippi River, and four creeks.” Hence it is said by the state that the pipe line system comes within the provisions of, and is controlled by, chapter 383-D1 of the 1931 Code. When building and operating its pipe line system, however, the appellee ignored the provisions of the said chapter of the Iowa Code. Under the provisions of the chapter, a permit must be obtained by the pipe line company, but the appellee refused to procure the permit. Furthermore, the chapter requires an annual license fee, but the appellee refused to pay the same. Consequently the present proceedings were commenced by the state to enjoin the appellee, as before explained, from operating its pipe line system in Iowa without complying with the provisions of chapter 383-D1 of the 1931 Code. Because the district court refused to sustain the contention of the state, it appeals.

It is said by the state that the judgment of the district court should be reversed because the building and operation of the appellee's pipe line system clearly comes within the provisions of said chapter. On the other hand, it is contended by the appellee that the chapter, so far as thus applied, is unconstitutional because the Iowa law is in conflict with the third paragraph of section 8, article 1, of the Constitution of the United States. So far as material, this constitutional provision is: “The Congress shall have Power * * * To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Such conflict arises, the appellee declares: First, because sections 8338-d2 and 8338-d3 of the above-named chapter of the Iowa Code require the appellee, as a condition precedent to transacting business in Iowa, to apply for and obtain from the board of railroad commissioners a permit authorizing it to do the business contemplated; second, because sections 8338-d6 to 8338-d12, inclusive, of the said chapter, require the appellee, as a condition precedent to transacting its pipe line business, to pay all costs and expenses of the proceedings leading up to the granting of the permit, together with the permit fee of $1 per mile for each inch of diameter of such pipe line located in the state of Iowa; third, because section 8338-d21 of the said chapter requires the appellee, as a condition precedent to transacting its business in Iowa, to agree “that the state of Iowa may levy and impose such general property taxes and/or taxes on gross receipt and/or taxes on net income as the general assembly may hereafter prescribe”; fourth, because section 8338-d13 of the said chapter requires the appellee to pay to the railroad commissioners for “the privilege and right to use or cross any of the public properties referred to in this chapter, and for the right to operate in the state of Iowa, * * * an annual license fee in the sum of fifty cents per mile of pipe line or fraction thereof, for each inch of diameter of such pipe line located in the state of Iowa, said license fee to be paid for the calendar year in advance and before January first of that year”; and, fifth, because that chapter attempts to levy a tax designated a license fee which is in fact a property tax upon the appellee's property, and thereby constitutes unlawful double taxation for the reason that said property is already subject to ad valorem taxes under and by authority of chapter 340-D1 of the 1931 Code of Iowa (sections 7103-d1 to 7103-d19).

In response to the appellee's contention, it is answered by the state: First, that chapter 383-D1 of the 1931 Code does not violate the commerce clause of the United States Constitution in requiring appellee to obtain a permit for the use of the state's highways and other public properties; second, that the state has a right to supervise and control the appellee's pipe line system under the general police power; third, that the state may inspect and make reasonable regulation of the appellee's pipe line and charge a reasonable fee therefor; fourth, that the state may charge the appellee for the use of its own public properties; and, fifth, that the license fees demanded do not amount to the taxation of the appellee's property.

This, in brief outline, sets out the controversies involved.

I. Consideration will first be given to the appellee's contention that sections 8338-d2 and 8338-d3 of the 1931 Code are prohibited by the commerce clause of the United States Constitution. These sections contain the following provisions:

“8338-d2. No pipe line company shall construct, maintain or operate any pipe line or lines outside of cities and towns under, along, over or across any public highway, grounds, waters or streams of this state without procuring from the board of railroad commissioners a permit granting permission so to do.

8338-d3. Any pipe line company authorized to engage in business in this state before engaging in its said business in this state shall file with the board of railroad commissioners its verified petition asking for a permit to construct, maintain and operate its pipe line or lines along, over or across the public highways, grounds, waters and streams of this state or the lands of any person, company, or corporation and to acquire the necessary interests in real estate for such purposes.” (The italics are ours.)

It will be seen, therefore, that section 8338-d2 requires that the appellee obtain a permit from the state railroad commissioners before it may construct, maintain, or operate its pipe lines under, along, over, or across any public highway, grounds, waters, or streams of this state. That section, then, relates only to the public property of the state, as distinguished from private property belonging to persons, companies, or corporations. There is nothing in the section under consideration which prohibits the appellee from operating its pipe lines upon the private properties of the state. As set forth in the preliminary statement, the appellee's pipe line system in Iowa crosses many public highways, the Des Moines river, and four creeks. These pipe lines are so located and laid that under ordinary conditions they do not interfere with the operation, maintenance, or drainage of the highways. But the lines are subject to breakage, leakage, and electrolysis which may affect and interfere with the operation, maintenance, drainage, and safety of the highways.

While it is true that the appellee is engaged exclusively in interstate commerce, yet that does not mean that it, without compensation, can appropriate and use public properties belonging to the state. The Fifth Amendment to the Constitution of the United States provides: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a...