United States v. Phillips Petroleum Co.

• Decision Date: 10 January 1941
• Docket Number: Civil Action No. 182.
• Citation: 36 F. Supp. 480
• Parties: UNITED STATES v. PHILLIPS PETROLEUM CO. et al.
• Court: U.S. District Court — District of Delaware

36 F. Supp. 480

UNITED STATES v. PHILLIPS PETROLEUM CO. et al.

Civil Action No. 182.

District Court, D. Delaware.

January 10, 1941.

COPYRIGHT MATERIAL OMITTED

Thurman Arnold, Asst. Atty. Gen., Mac Asbill and W. B. Watson Snyder, Sp. Assts. to Atty. Gen., H. Douglas Weaver, Sp. Atty., of Washington, D. C., and Stewart Lynch, U. S. Atty., of Wilmington, Del., for plaintiff.

Don Emery and Rayburn L. Foster, both of Bartlesville, Okl., and Richards, Layton & Finger, of Wilmington, Del., for defendants.

Before BIGGS, CLARK, and JONES, Circuit Judges.

BIGGS, Circuit Judge.

The United States of America has filed a petition against the defendants, corporations of the State of Delaware, alleging that in the guise of dividends paid by the Pipe Line Company to the Petroleum Company, and more recently by the Petroleum Company operating the Pipe Line Company as a department or division, the Petroleum Company has received rebates in violation of 49 U.S.C.A. §§ 2, 6(7), and 49 U.S.C.A. § 41(1), Section 1 of the Elkins Act. The United States pursuant to the provisions of 49 U.S.C.A. § 43, Section 3 of the Elkins Act, seeks a permanent injunction to prohibit the continuation of, or a return to, the practices complained of, and pursuant to the provisions of 49 U.S.C.A. § 41(3), the first section of the Elkins Act, as amended by the Hepburn Act, 34 Stat. 588, seeks the forfeiture of three times the sum of money or other valuable consideration received or accepted as rebates. It appears from the petition that the transportation of gasoline and petroleum by the Pipe Line Company took place outside of the District of Delaware and from an affidavit filed on behalf of the defendants it appears also that none of the acts complained of in the petition took place within the District of Delaware. For the purpose of disposing of the pending motions we will assume that the facts set forth in the affidavit are correct and we will treat them as if they had been alleged in the petition. We will also disregard any question which might arise by reason of the situs attributed to stock of a Delaware corporation by the law of Delaware.

The defendants have filed a motion and an alternative motion to dismiss the suit under Rule 12(b) (3) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, alleging improper venue. The motion asserts that such a suit as that at bar may be brought only in the district where the acts complained of or some part of them were committed and that it does not appear from the petition that any of the acts complained of were committed in the District of Delaware while it appears to the contrary that the acts of transportation and the acts complained of took place outside of the District of Delaware. This motion is addressed to the whole suit. The alternative motion, however, moves for the dismissal of the action to the extent of the injunctive relief sought under Section 3 of the Elkins Act in the event the motion to dismiss the suit in its entirety is denied.

An expediting court was constituted upon the certificate of the Attorney General of the United States, filed pursuant to 49 U.S.C.A. § 44. Though the motions of the defendants are directed to questions of venue, none the less questions of jurisdiction arise also and we shall deal with them as well in this opinion.

As a preliminary proposition the defendants point out that Section 51 of the Judicial Code, 28 U.S.C.A. § 112, was in effect prior to the enactment of the Elkins Act and that the reenactment of Section 51 as part of the Judicial Code of 1911, 36 Stat. 1101, did not repeal the venue provisions of the Elkins Act. They also point out that neither the venue provisions of the act creating the Commerce Court, Act June 18, 1910, 36 Stat. 539, nor those of the act abolishing the Commerce Court, the Urgent Deficiencies Act of 1913, 38 Stat. 219, affected the venue provisions of the Elkins Act. In substance the defendants argue that Section 51 is not to be presumed to affect venue as prescribed by the Elkins Act, citing by way of analogy St. Louis Southwestern Ry. Co. v. S. Samuels & Co., 5 Cir., 211 F. 588, and Wogan Bros. Co., Inc. v. American Sugar Refining Company, D.C., 215 F. 273.

The defendants next deal specifically with the venue of what they term the injunction suit, viz., that portion of the petition setting forth the cause of action upon which the prayers for injunctive relief are based. Referring to Section 1 of the Elkins Act, they state correctly that they are charged with its violation. They then quote that portion of Section 1 which provides that violations of its provisions "shall be prosecuted in any court of the United States having jurisdiction of crimes within the district in which such violation was committed, or through which the transportation may have been conducted; and whenever the offense is begun in one jurisdiction and completed in another it may be dealt with, inquired of, tried, determined, and punished in either jurisdiction in the same manner as if the offense had been actually and wholly committed therein." They contend that the prosecutions contemplated in Section 1 are not limited to crimes despite the specific reference to jurisdiction of crimes which we have quoted, but on the contrary that these venue provisions apply with equal force to injunctive proceedings brought under Section 3 of the Elkins Act. In support of this argument the defendants point to the language of Section 3 to the effect that the Attorney General may prosecute injunctive proceedings and that the Expediting Act shall apply to any case so prosecuted under the direction of the Attorney General.

The defendants next refer to the venue provisions of Section 3 of the Elkins Act and argue that (since prior to the enactment of the Elkins Act no court had jurisdiction to enforce public tariffs or require discontinuance of discriminations, citing Missouri Pac. R. Co. v. United States, 189 U.S. 274, 23 S.Ct. 507, 47 L.Ed. 811) Congress by the venue provisions of Section 3 referred to that court which had been given jurisdiction by the Elkins Act itself. In short, the defendants seek to treat the venue provisions of Section 3 as though they related only to jurisdiction and to read the admitted venue provisions of Section 1 into Section 3 and to make them a part thereof by reference. Then, citing Section 2 of the Elkins Act, and contending that the Elkins Act is "entire" and that Congress intended it to stand on its own feet and not to rely on any other general law, the defendants conclude their argument.

In regard to that portion of the petition upon which the claim of forfeiture is based and which the defendants refer to as the penalty suit, the defendants contend that the phrase contained in 49 U.S.C.A. § 41 (3), added to the Elkins Act by the Hepburn Amendment, which provides that a suit to recover by way of forfeiture may be instituted "in any court of the United States of competent jurisdiction" is solely a jurisdictional provision and has no bearing upon venue. The defendants then argue that the venue provisions of Section 1 of the Elkins Act must apply to a suit for forfeiture which they allege is of the nature of a criminal proceeding. Congress, they say, could have had no intention to authorize such a suit (although civil) in any other district than that where the criminal offense was committed.

We have set forth the contentions of the defendants at such length because the questions here presented for our determination are of original impression. The views that we take of these questions, however, are quite different from those urged by the defendants.

It is true that the Elkins Act must be considered as a whole. When passed in 1903, 32 Stat. 847, it did not include 49 U.S.C.A. § 41(3), the forfeiture section. As we have stated, this was added by the Hepburn Act of 1906. Section 1 of the Elkins Act provided that anything done or omitted to be done by a corporate common carrier in violation of the provisions of the acts regulating commerce was a misdemeanor and fixed a penalty. Since many corporate common carriers operated in 1903, as now, in more than one state or federal district, Congress clearly had in mind the fact that misdemeanors might be committed as part of continuous transportation operations carried on by such carriers in more than one state or district; viz., that a misdemeanor might be begun in one district and completed in another. Under such circumstances the question of venue of criminal actions might be expected to arise. Congress therefore provided for the venue of criminal prosecutions to be laid either in the district where the misdemeanor was commenced or where it was completed. Congress could not have fixed venue elsewhere in the light of Article III, Section 2, Clause 3, of the Constitution of the United States and the Sixth Amendment. The first section of the Elkins Act deals only with crimes. This is made plain by the use of the phrase "Every violation of this section shall be prosecuted in any court of the United States having jurisdiction of crimes within the district in which such violation was committed, or through which the transportation may have been conducted; * * *".

Section 2 of the Elkins Act deals with the procedure for enforcing the provisions of the statutes relating to interstate commerce and provides for bringing into court additional parties other than carriers, persons interested in or affected by rates or regulations. In this portion of the statute Congress had in mind the enforcement of the Interstate Commerce Act, 49 U.S.C. A. § 1 et seq., as distinguished from punishment for its violation. Section 2 looks to proceedings of the nature of equitable proceedings.

Section 3 of the Elkins Act provides for equitable proceedings to enforce expeditiously the provisions of the Interstate Commerce Act without the burden of formal pleadings and proceedings in equity. The pertinent...