State of Missouri Barrett v. Kansas Natural Gas Co Kansas Natural Gas Co v. State of Kansas Helm State of Kansas Jackson v. Central Trust Co of New York

Decision Date26 May 1924
Docket NumberNo. 137,No. 155,No. 133,155,133,137
Citation68 L.Ed. 1027,44 S.Ct. 544,265 U.S. 298
PartiesSTATE OF MISSOURI ex rel. BARRETT, Atty. Gen., et al. v. KANSAS NATURAL GAS CO. KANSAS NATURAL GAS CO. v. STATE OF KANSAS ex rel. HELM. STATE OF KANSAS et rel. JACKSON v. CENTRAL TRUST CO. OF NEW YORK et al
CourtU.S. Supreme Court

Mr. J. W. Dana, of Kansas City, Mo., for Kansas City Gas Co. and Public Service Commission of Missouri.

[Argument of Counsel from pages 299-303 intentionally omitted] Messrs. Robert D. Garver and H. O. Caster, both of Bartlesville, Okl., for Kansas Natural Gas Co.

Messrs. Frank E. Atwood, of Carrollton, Mo., John M. Garfield, of Cleveland, Ohio, Jesse W. Barrett and James D. Lindsay, both of Jefferson City, Mo., and L. H. Breuer, of Rolla, Mo., for the State of Missouri and Missouri Public Service Commission.

Mr. F. S. Jackson, of Topeka, Kan., for Helm.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

These cases were consolidated for argument. They present for decision the single question whether the business of the Kansas Natural Gas Company, hereinafter called the Supply Company, consisting of the transportation of natural gas from one state to another for sale, and its sale and delivery, to distributing companies, is interstate commerce, free from state interference?

The facts necessary to be considered in reaching a conclusion are, shortly, as follows:

The Supply Company is a Delaware corporation, engaged in producing and buying natural gas, mostly in Oklahoma but some in Kansas, and, by means of pipe lines, transporting it into Kansas and from Kansas into the state of Missouri, and in each state selling and delivering it to distributing companies, which then sell and deliver it to local consumers in numerous communities in Kansas and Missouri. The gas originating in Kansas is mingled for transportation in the same lines with that originating in Oklahoma. The pipe lines are continuous from the wells to the place of delivery.

The three cases are alike in the fact that they arise from the action of the Supply Company in making an increase of rates from 35 cents to 40 cents per 1,000 cubic feet—in Missouri, without the consent and approval of the Public Utilities Commission of the state, and in Kansas, notwithstanding a previous order of the federal court fixing a 35-cent rate and the action of the Utilities Commission approving and fixing that rate. The power of the Utilities Commission of each state is challenged on the ground that the matter, under the commerce clause of the Constitution, is not subject to state control.

In No. 155, appellants brought suit in the federal District Court to enjoin the Supply Company from increasing its rates. The injunction prayed was denied. 282 Fed. 341.

In No. 133, the defendants in error filed a petition in the Kansas Supreme Court for a writ of mandamus to compel the Supply Company to re-establish and maintain the rate of 35 cents per 1,000 cubic feet for gas furnished to the distributing companies, until otherwise ordered by the Utilities Commission. The case was presented to that court on demurrer to the return and answer. The demurrer was sustained and a peremptory writ of mandamus allowed, as prayed, 111 Kan. 809, 208 Pac. 622.

In No. 137, the suit was to enjoin the Supply Company from collecting or attempting to collect the increased rates from various gas distributing companies until the consent thereto of the Utilities Commission of the state should be secured. The federal District Court denied the injunction, but retained the bill for another purpose, not necessary to be stated. Central Trust Co. of New York v. Consumers' Light, Heat & Power Co., 282 Fed. 680.

The business of the Supply Company, with an exception not important here, is wholly interstate. The sales and deliveries are in large quantities not for consumption, but for resale to consumers. There is no relation of agency between the Supply Company and the distributing companies, or other relation except that of seller and buyer (Public Utilities Comm. v. Landon, 249 U. S. 236, 244-245, 39 Sup. Ct. 268, 63 L. Ed. 577), and the interest of the former in the commodity ends with its delivery to the latter, to which title and control thereupon pass absolutely. The question is therefore presented in its simplest form, and, if the claim of state power be upheld, it is difficult to see how it could be denied in any case of interstate transportation and sale of gas. Both federal courts denied the power. The state court conceded that the business was interstate and subject to federal control, but rested its decision the other way upon the fact that Congress had not acted in the matter and that, in the absence of such action, it was within the regulating power of the state.

The question is controlled by familiar principles. Transportation of gas from one state to another is interstate commerce, and the sale and delivery of it to the local distributing companies is a part of such commerce. In Public Utilities Comm. v. Landon, supra, at page 245 (39 Sup. Ct. 269) this court said:

'That the transportation of gas through pipe lines from one state to another is interstate commerce may not be doubted; also, it is clear that as part of such commerce the receivers might sell and deliver gas so transported to local distributing companies free from unreasonable interference by the state.'

See Pennsylvania v. West Virginia, 262 U. S. 553, 596, 43 Sup. Ct. 658, 67 L. Ed. 1117) and cases there cited.

The line of division between cases where, in the absence of congressional action, the state is authorized to act, and those where state action is precluded by mere force of the commerce clause of the Constitution, is not always clearly marked. In the absence of congressional legislation, a state may constitutionally impose taxes, enact inspection laws, quarantine laws and, generally, laws of internal police, although they may have an incidental effect upon interstate commerce....

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